Understanding Star Group LP's Dividend Dynamics
Star Group LP (SGU, Financial) recently announced a dividend of $0.16 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-19. 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 look into Star Group LP's dividend performance and assess its sustainability.
What Does Star Group LP Do?
Star Group LP is a company engaged in providing home heating products and services to residential and commercial customers. It offers heating and air conditioning equipment, as well as home security and plumbing services. The company also sells diesel fuel, gasoline, and home heating oil. Geographically, the company operates in the U.S.
A Glimpse at Star Group LP's Dividend History
Star Group LP has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a quarterly basis. Star Group LP has increased its dividend each year since 2009. 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 15 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Star Group LP's Dividend Yield and Growth
As of today, Star Group LP currently has a 12-month trailing dividend yield of 5.60% and a 12-month forward dividend yield of 5.69%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Star Group LP's annual dividend growth rate was 6.90%. Extended to a five-year horizon, this rate decreased to 6.70% per year. And over the past decade, Star Group LP's annual dividends per share growth rate stands at 7.00%.
Based on Star Group LP's dividend yield and five-year growth rate, the 5-year yield on cost of Star Group LP stock as of today is approximately 7.74%.
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 2023-09-30, Star Group LP's dividend payout ratio is 0.78, which may suggest that the company's dividend may not be sustainable.
Star Group LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Star Group LP's profitability 7 out of 10 as of 2023-09-30, 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. Star Group LP'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 Star Group LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Star Group LP's revenue has increased by approximately 19.40% per year on average, a rate that outperforms approximately 68.3% 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, Star Group LP's earnings decreased by approximately -8.70% per year on average, a rate that outperforms approximately 21.56% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.60%, which outperforms approximately 40.67% of global competitors.
Next Steps
Considering Star Group LP's consistent dividend payments, notable dividend growth rate, manageable payout ratio, and solid profitability and growth metrics, the company presents itself as an attractive option for value investors focused on dividend income. While the payout ratio raises some questions about sustainability, the company's profitability and growth prospects may alleviate these concerns. However, investors should always conduct thorough due diligence, keeping an eye on market trends and company performance updates. For those interested in expanding their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize 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.
