Understanding the Dividend Performance and Sustainability of Close Brothers Group PLC
Close Brothers Group PLC (CBGPY, Financial) recently announced a dividend of $1.1 per share, payable on 2023-12-11, with the ex-dividend date set for 2023-10-19. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Close Brothers Group PLC's dividend performance and assess its sustainability.
What Does Close Brothers Group PLC Do?
Close Brothers Group PLC is a merchant banking group providing lending, deposit solutions, wealth management services, and securities trading. The company primarily serves small businesses and individuals in the United Kingdom. Its strategy focuses on niche markets to drive high levels of repeat business with clients. The company distributes its service offerings with a direct salesforce and an intermediated distribution network. Its banking division provides asset, invoice, motor, premium, and property finance. Close Brothers' security business is primarily a liquidity provider to U.K. retail stockbrokers and institutions. The group's asset management division offers financial planning and investment management services.
A Glimpse at Close Brothers Group PLC's Dividend History
Close Brothers Group PLC has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Close Brothers Group PLC's Dividend Yield and Growth
As of today, Close Brothers Group PLC currently has a 12-month trailing dividend yield of 7.54% and a 12-month forward dividend yield of 7.78%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Close Brothers Group PLC's annual dividend growth rate was 14.80%. Extended to a five-year horizon, this rate decreased to 2.00% per year. And over the past decade, Close Brothers Group PLC's annual dividends per share growth rate stands at 3.40%.
Based on Close Brothers Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Close Brothers Group PLC stock as of today is approximately 8.32%.
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 2023-07-31, Close Brothers Group PLC's dividend payout ratio is 1.25. This may suggest that the company's dividend may not be sustainable.
Close Brothers Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Close Brothers Group PLC's profitability 5 out of 10 as of 2023-07-31, suggesting fair profitability. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Close Brothers Group PLC's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Close Brothers Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Close Brothers Group PLC's revenue has increased by approximately 3.10% per year on average, a rate that underperforms than approximately 69.37% of global competitors.
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. During the past three years, Close Brothers Group PLC's earnings increased by approximately -9.20% per year on average, a rate that underperforms than approximately 90.18% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -12.10%, which underperforms than approximately 95.04% of global competitors.
Next Steps
Close Brothers Group PLC's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a mixed picture. While the company has a commendable history of dividend payments and a high dividend yield, its payout ratio raises concerns about the sustainability of future dividends. Moreover, the company's moderate growth and profitability ranks suggest that while it has the potential for future growth, it faces stiff competition. Therefore, investors should carefully consider these factors before making 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.
