A Comprehensive Examination of WPP PLC's Dividend Performance and Sustainability
WPP PLC (WPP, Financial) recently announced a dividend of $0.95 per share, payable on 2023-11-03, with the ex-dividend date set for 2023-10-12. As investors eagerly anticipate this upcoming payment, it's crucial to delve into the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's assess the sustainability of WPP PLC's dividend performance.
What Does WPP PLC Do?
WPP PLC, the world's largest ad-holding company based on annual revenues, provides a wide range of services including traditional and digital advertising, public relations, and consulting. Operating globally, over 70% of its revenue is generated from developed regions such as North America, the U.K., and Western Europe.
A Glimpse at WPP PLC's Dividend History
Since 1993, WPP PLC has upheld a consistent dividend payment record, distributing dividends bi-annually. The following chart displays annual Dividends Per Share for historical trend analysis.
Breaking Down WPP PLC's Dividend Yield and Growth
WPP PLC currently boasts a 12-month trailing dividend yield of 5.32% and a 12-month forward dividend yield of 5.56%, indicating an anticipated increase in dividend payments over the next 12 months.
Over the past three years, WPP PLC's annual dividend growth rate was -17.50%. On a five-year horizon, this rate decreased to -18.40% per year. Over the past decade, WPP PLC's annual dividends per share growth rate was -1.90%. Based on WPP PLC's dividend yield and five-year growth rate, the 5-year yield on cost of WPP PLC stock as of today is approximately 1.92%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio is a critical metric for assessing the sustainability of a dividend. As of 2023-06-30, WPP PLC's dividend payout ratio is 0.81, which may suggest that the company's dividend may not be sustainable. However, WPP PLC's profitability rank of 7 out of 10, along with reported net profit in 9 out of the past 10 years, indicates good profitability prospects.
Growth Metrics: The Future Outlook
WPP PLC's growth rank of 7 out of 10 suggests a promising growth trajectory relative to its competitors. The company's strong revenue per share and 3-year revenue growth rate of approximately 7.20% per year, outperforming approximately 69.1% of global competitors, further strengthen its revenue model. Additionally, WPP PLC's 3-year EPS growth rate of approximately -3.10% per year, outperforming approximately 38.95% of global competitors, showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run.
Next Steps
In conclusion, WPP PLC's consistent dividend payments, combined with its strong profitability and growth indicators, make it a potential candidate for dividend-focused investors. However, its high payout ratio warrants close monitoring. As the company navigates through the dynamic market conditions, it will be interesting to see how it sustains its dividend payments while balancing growth and profitability. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
