Understanding Dell's Dividend Dynamics
Dell Technologies Inc (DELL, Financial) recently announced a dividend of $0.37 per share, payable on 2024-02-02, with the ex-dividend date set for 2024-01-22. 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 Dell Technologies Inc's dividend performance and assess its sustainability.
What Does Dell Technologies Inc Do?
Dell Technologies is a broad information technology vendor, primarily supplying hardware to enterprises. It is focused on premium personal computers and enterprise on-premises data center hardware. It holds top-three shares in its core markets of personal computers, peripheral displays, mainstream servers, and external storage. Dell is vertically-integrated but has a robust ecosystem of component and assembly partners, and also relies heavily on channel partners to fulfill its sales.
A Glimpse at Dell Technologies Inc's Dividend History
Dell Technologies Inc has maintained a consistent dividend payment record since 2022, with dividends currently distributed on a quarterly basis. However, the company has not increased its dividend annually, therefore it cannot be classified as a dividend king—a title reserved for companies that have a history of increasing dividends for at least 50 consecutive years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Dell Technologies Inc's Dividend Yield and Growth
As of today, Dell Technologies Inc currently has a 12-month trailing dividend yield of 1.73% and a 12-month forward dividend yield of 1.78%. This suggests an expectation of increased dividend payments over the next 12 months. Additionally, based on Dell Technologies Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Dell Technologies Inc stock as of today is approximately 1.73%.
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 2023-10-31, Dell Technologies Inc's dividend payout ratio is 0.40.
Dell Technologies Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Dell Technologies Inc's profitability 4 out of 10 as of 2023-10-31, suggesting that the dividend may not be sustainable given that the company has reported net profit in 4 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. Dell Technologies Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Yet, Dell Technologies Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model with an increase of approximately 6.40% per year on average, outperforming approximately 55.58% 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, Dell Technologies Inc's earnings increased by approximately 77.90% per year on average, outperforming approximately 92.99% of global competitors.
Final Thoughts on Dell Technologies Inc's Dividend Profile
In conclusion, while Dell Technologies Inc offers a reliable dividend payment with a reasonable yield, its growth metrics and profitability rank present a mixed picture regarding the long-term sustainability of its dividends. Investors should consider these factors alongside Dell Technologies Inc's strategic initiatives and competitive position within the IT industry. Will Dell Technologies Inc manage to sustain and possibly grow its dividend in the years to come? Value investors may want to keep a close eye on the company's future earnings reports and strategic developments. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research.
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.
