A Comprehensive Review of the Bank's Dividend Performance and Sustainability
Capitec Bank Holdings Ltd (CKHGY, Financial) recently announced a dividend of $0.41 per share, payable on 2023-11-17, with the ex-dividend date set for 2023-10-19. As investors anticipate this upcoming payment, the company's dividend history, yield, and growth rates are under scrutiny. Using data from GuruFocus, let's delve into Capitec Bank Holdings Ltd's dividend performance and assess its sustainability.
What Does Capitec Bank Holdings Ltd Do?
Capitec Bank Holdings Ltd is a retail bank with over 850 branches in South Africa. Its services cater to three customer needs: saving, credit, and transacting. The bank operates in three segments: Retail bank, Business bank, and the Insurance business. Net interest income accounts for over two-thirds of total company revenue, with additional revenue from loan and transaction fees. Approximately a third of the company's loans are mortgages, and another third are other secured loans. Credit facilities and unsecured credit loans make up most of the remaining loans outstanding.
A Glimpse at Capitec Bank Holdings Ltd's Dividend History
Since 2021, Capitec Bank Holdings Ltd has maintained a consistent dividend payment record, distributing dividends bi-annually. The chart below shows the annual Dividends Per Share for tracking historical trends.
Breaking Down Capitec Bank Holdings Ltd's Dividend Yield and Growth
As of today, Capitec Bank Holdings Ltd has a 12-month trailing dividend yield of 2.34% and a 12-month forward dividend yield of 2.38%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, the bank's annual dividend growth rate was 27.00%. Based on the bank's dividend yield and five-year growth rate, the 5-year yield on cost of Capitec Bank Holdings Ltd stock as of today is approximately 2.34%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-02-28, Capitec Bank Holdings Ltd's dividend payout ratio is 0.45.
Capitec Bank Holdings Ltd's profitability rank is 7 out of 10 as of 2023-02-28, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Capitec Bank Holdings Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. The bank's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. Lastly, the bank's 5-year EBITDA growth rate of 15.40% outperforms approximately 72.7% of global competitors.
Next Steps
Considering Capitec Bank Holdings Ltd's consistent dividend payments, impressive growth rate, reasonable payout ratio, strong profitability, and robust growth metrics, the bank appears to be a promising investment for dividend investors. However, as with all investments, potential investors should conduct their own thorough research before making any investment decisions. 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.
