Assessing the Sustainability and Growth of Charles Schwab Corp's Dividends
Charles Schwab Corp (SCHW, Financial) recently announced a dividend of $0.25 per share, payable on 2024-02-23, with the ex-dividend date set for 2024-02-08. 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 Charles Schwab Corp's dividend performance and assess its sustainability.
What Does Charles Schwab Corp Do?
Charles Schwab operates in brokerage, wealth management, banking, and asset-management businesses. The company runs a large network of brick-and-mortar brokerage branch offices, a well-established online investing website, and has mobile trading capabilities. It also operates a bank and a proprietary asset management business and offers services to independent investment advisors. The company is among the largest firms in the investment business, with over $7 trillion of client assets at the end of December 2022. Nearly all of its revenue is from the United States.
A Glimpse at Charles Schwab Corp's Dividend History
Charles Schwab Corp has maintained a consistent dividend payment record since 1989. Dividends are currently distributed on a quarterly basis. Charles Schwab Corp has increased its dividend each year since 1989. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 35 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Charles Schwab Corp's Dividend Yield and Growth
As of today, Charles Schwab Corp currently has a 12-month trailing dividend yield of 1.63% and a 12-month forward dividend yield of 1.63%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, Charles Schwab Corp's annual dividend growth rate was 7.30%. Extended to a five-year horizon, this rate increased to 19.50% per year. And over the past decade, Charles Schwab Corp's annual dividends per share growth rate stands at an impressive 16.30%.
Based on Charles Schwab Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Charles Schwab Corp stock as of today is approximately 3.97%.
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 2023-12-31, Charles Schwab Corp's dividend payout ratio is 0.32.
Charles Schwab Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Charles Schwab Corp's profitability 7 out of 10 as of 2023-12-31, 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. Charles Schwab Corp'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 Charles Schwab Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Charles Schwab Corp's revenue has increased by approximately 10.50% per year on average, a rate that outperforms approximately 57.25% 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, Charles Schwab Corp's earnings increased by approximately 13.00% per year on average, a rate that outperforms approximately 52.38% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.90%, which outperforms approximately 60.16% of global competitors, underlines its strong financial health.
Next Steps
In conclusion, Charles Schwab Corp's consistent dividend payments, robust dividend growth rate, prudent payout ratio, and solid profitability and growth metrics paint a promising picture for value investors. The company's financial stability and commitment to shareholder returns make it a noteworthy consideration for those looking to add a resilient dividend-paying stock to their portfolio. As the investment landscape evolves, Charles Schwab Corp appears well-positioned to maintain its dividend aristocrat status and possibly deliver enhanced shareholder value. Could Charles Schwab Corp be the dividend-paying stock you've been searching for to bolster your investment strategy?
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.
