Assessing The Scotts Miracle Gro Co's Dividend Sustainability and Growth
The Scotts Miracle Gro Co (SMG, Financial) recently announced a dividend of $0.66 per share, payable on December 8, 2023, with the ex-dividend date set for November 24, 2023. 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 look into The Scotts Miracle Gro Co's dividend performance and assess its sustainability.
What Does The Scotts Miracle Gro Co Do?
Scotts Miracle-Gro is the largest provider of gardening and lawncare products in the United States. The majority of the company's sales are to large retailers that include Home Depot, Lowe's, and Walmart. Scotts Miracle-Gro can sell its products at a higher price point than its competition because of a well-recognized portfolio of brands that include Miracle-Gro, Roundup, Ortho, Tomcat, and Scotts. Scotts is also the leading supplier of cannabis-growing equipment in North America through its Hawthorne business.
A Glimpse at The Scotts Miracle Gro Co's Dividend History
The Scotts Miracle Gro Co has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis. The Scotts Miracle Gro Co has increased its dividend each year since 2005. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 18 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down The Scotts Miracle Gro Co's Dividend Yield and Growth
As of today, The Scotts Miracle Gro Co currently has a 12-month trailing dividend yield of 4.69% and a 12-month forward dividend yield of 4.69%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, The Scotts Miracle Gro Co's annual dividend growth rate was 3.80%. Extended to a five-year horizon, this rate increased to 4.70% per year. And over the past decade, The Scotts Miracle Gro Co's annual dividends per share growth rate stands at 5.80%.
Based on The Scotts Miracle Gro Co's dividend yield and five-year growth rate, the 5-year yield on cost of The Scotts Miracle Gro Co stock as of today is approximately 5.90%.
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 September 30, 2023, The Scotts Miracle Gro Co's dividend payout ratio is 0.00.
The Scotts Miracle Gro Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Scotts Miracle Gro Co's profitability 7 out of 10 as of September 30, 2023, suggesting good profitability prospects. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. The Scotts Miracle Gro Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and The Scotts Miracle Gro Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Scotts Miracle Gro Co's revenue has increased by approximately -4.40% per year on average, a rate that underperforms approximately 90.35% 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, The Scotts Miracle Gro Co's earnings increased by approximately -44.90% per year on average, a rate that underperforms approximately 97.56% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -14.80%, which underperforms approximately 92.86% of global competitors.
Next Steps
In conclusion, while The Scotts Miracle Gro Co boasts a long history of consistent dividend payments and has been recognized as a dividend achiever, its recent growth metrics and payout ratio raise questions about the long-term sustainability of its dividend growth. The company's profitability remains strong, but revenue and earnings growth have underperformed compared to industry peers. Value investors may want to consider these factors when evaluating the potential for future dividend increases and the overall investment attractiveness of The Scotts Miracle Gro Co. Could the company's strategic initiatives and market position enable it to overcome these growth challenges and continue its dividend legacy? For those looking to explore dividend opportunities further, 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.
