Exploring the Sustainability and Growth of Metro Inc's Dividends
Metro Inc(MTRAF, Financial) recently announced a dividend of $0.3 per share, payable on 2023-11-14, with the ex-dividend date set for 2023-10-26. 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 Metro Inc's dividend performance and assess its sustainability.
What Does Metro Inc Do?
Metro is one of the largest grocery retailers in Canada. With its 2018 acquisition of Jean Coutu, it also boasts a meaningful drugstore footprint. Noteworthy grocery banners include Metro, Metro Plus, Super C, and Food Basics, while its pharmacies primarily operate under the Jean Coutu and Brunet trademarks. It utilizes an array of business models, but it most frequently acts as either a retailer, operating individual stores, or a franchiser, licensing its trademarks and supplying merchandise to franchisees. Metro also acts as a distributor, leveraging its supply chain capabilities to service smaller neighborhood grocery stores. About 75% of its owned and franchised food and drug outlets are in Quebec.
A Glimpse at Metro Inc's Dividend History
Metro Inc has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Metro Inc's Dividend Yield and Growth
As of today, Metro Inc currently has a 12-month trailing dividend yield of 1.72% and a 12-month forward dividend yield of 1.74%. This suggests an expectation of increasing dividend payments over the next 12 months.
Metro Inc's dividend yield of 1.72% is near a 10-year high and outperforms than 27.09 of global competitors in the Retail - Defensive industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Over the past three years, Metro Inc's annual dividend growth rate was 11.30%. Extended to a five-year horizon, this rate decreased to 8.60% per year. And over the past decade, Metro Inc's annual dividends per share growth rate stands at an impressive 13.40%.
Based on Metro Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Metro Inc stock as of today is approximately 2.60%.
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 2023-06-30, Metro Inc's dividend payout ratio is 0.28.
Metro Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Metro Inc's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. 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. Metro Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Metro Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Metro Inc's revenue has increased by approximately 6.20% per year on average, a rate that outperforms than approximately 55.17% 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, Metro Inc's earnings increased by approximately 8.10% per year on average, a rate that outperforms than approximately 37.24% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.80%, which outperforms than approximately 20.96% of global competitors.
Next Steps
In conclusion, Metro Inc's consistent dividend payments, impressive dividend growth rate, and low payout ratio all point to the sustainability of its dividends. Furthermore, the company's high profitability and robust growth metrics indicate a promising future. Therefore, investors seeking a steady income stream should consider Metro Inc as a potential addition to their portfolio.
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.
