Understanding the Dividend Prospects of Smiths Group PLC
Smiths Group PLC (SMGZY, Financial) recently announced a dividend of $0.17 per share, payable on 2024-05-20, with the ex-dividend date set for 2024-04-04. 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 Smiths Group PLC's dividend performance and assess its sustainability.
What Does Smiths Group PLC Do?
With its start as a London jeweler in the 19th century, Smiths Group has for most of its history operated as a company operating disparate but economically attractive businesses. Thematically, it runs businesses that manufacture niche products in security- or safety-sensitive industries. Today, the business is split across four divisions: mechanical seals, weapons detection, electrical connectors, and specialized hoses. The end customers for these products include airports, NASA, government security or defense departments, and hospitals.
A Glimpse at Smiths Group PLC's Dividend History
Smiths Group PLC has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Smiths Group PLC's Dividend Yield and Growth
As of today, Smiths Group PLC currently has a 12-month trailing dividend yield of 2.49% and a 12-month forward dividend yield of 2.55%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Smiths Group PLC's annual dividend growth rate was 8.10%. Extended to a five-year horizon, this rate decreased to -1.40% per year. Based on Smiths Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Smiths Group PLC stock as of today is approximately 2.32%.
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 2024-01-31, Smiths Group PLC's dividend payout ratio is 0.42.
Smiths Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Smiths Group PLC's profitability 7 out of 10 as of 2024-01-31, 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. Smiths Group PLC'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 Smiths Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Smiths Group PLC's revenue has increased by approximately 10.30% per year on average, a rate that outperforms approximately 58.31% 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, Smiths Group PLC's earnings increased by approximately 25.20% per year on average, a rate that outperforms approximately 66.87% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.70%, which outperforms approximately 48.57% of global competitors, further indicates a strong position for future dividend sustainability.
Next Steps for Investors
In conclusion, Smiths Group PLC's consistent dividend payments, a reasonable payout ratio, and strong growth metrics bode well for its dividend sustainability. The company's ability to maintain a balance between rewarding shareholders and reinvesting in its growth is a positive sign for value investors. Those interested in dividend stocks with promising futures should consider Smiths Group PLC as part of their investment portfolio. As always, it's advisable to conduct thorough research and consider one's investment strategy before making any decisions. 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.
