Understanding the Dividend Performance and Future Prospects of Hennes & Mauritz AB
Hennes & Mauritz AB(HNNMY, Financial) recently announced a dividend of $0.06 per share, payable on 2023-11-30, with the ex-dividend date set for 2023-11-08. As investors look forward to this upcoming payment, it's crucial to delve into the company's dividend history, yield, and growth rates. This analysis, using data from GuruFocus, aims to evaluate Hennes & Mauritz AB's dividend performance and its sustainability.
What Does Hennes & Mauritz AB Do?
Hennes & Mauritz AB is a global multibrand fashion conglomerate, founded in 1947. Its flagship brand, H&M, generates the majority of its revenue. The company's newer brands, including COS, &Other Stories, Monki, Weekday, and Arket, are experiencing faster growth. With a low-single-digit market share in the fragmented global apparel market, Hennes & Mauritz AB operates approximately 4,400 stores worldwide, with 3,947 being H&M-brand stores.
A Glimpse at Hennes & Mauritz AB's Dividend History
Hennes & Mauritz AB has maintained a consistent dividend payment record since 2021, distributing dividends bi-annually. The chart below shows the annual Dividends Per Share for tracking historical trends.
Breaking Down Hennes & Mauritz AB's Dividend Yield and Growth
As of today, Hennes & Mauritz AB has a 12-month trailing dividend yield of 4.43% and a 12-month forward dividend yield of 4.32%. This indicates an expectation of decreased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was -12.60%. Based on these figures, the 5-year yield on cost of Hennes & Mauritz AB stock is approximately 4.43% as of today.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, it's important 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, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-08-31, Hennes & Mauritz AB's payout ratio is 1.68, suggesting that the company's dividend may not be sustainable.
Hennes & Mauritz AB's profitability rank is 7 out of 10 as of 2023-08-31, suggesting good profitability prospects. The company has reported positive net income each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Hennes & Mauritz AB's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Hennes & Mauritz AB's revenue has increased by approximately -1.20% per year on average, a rate that underperforms approximately 62.64% 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, Hennes & Mauritz AB's earnings increased by approximately -35.70% per year on average, a rate that underperforms approximately 87.98% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -25.60% underperforms approximately 92.36% of global competitors.
Conclusion
While Hennes & Mauritz AB's consistent dividend payments are commendable, the company's payout ratio and declining dividend growth rate could raise concerns about the sustainability of its dividends. Despite its good profitability rank, the company's growth metrics indicate it underperforms a considerable percentage of global competitors. Therefore, investors should closely monitor Hennes & Mauritz AB's financial performance and strategic initiatives to ensure its ability to sustain dividends in the long run.
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.
