Assessing the Sustainability and Prospects of ConvaTec Group PLC's Dividend
ConvaTec Group PLC (CNVVY, Financial) recently announced a dividend of $0.18 per share, payable on 2024-06-07, with the ex-dividend date set for 2024-04-25. 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 ConvaTec Group PLC's dividend performance and assess its sustainability.
What Does ConvaTec Group PLC Do?
Originally spun out of Bristol-Myers Squibb, ConvaTec Group PLC designs, manufactures, and markets advanced wound care, ostomy, continence care, and infusion sets for the acute-care hospital and chronic-care home settings. Advanced wound care and ostomy supplies are the largest divisions, accounting for 33% and 29% of total revenue, respectively. Continence care has become a slightly smaller business (21% of revenue) following the decision to exit the acute care market, and infusion sets contribute 17% of consolidated revenue.
A Glimpse at ConvaTec Group PLC's Dividend History
ConvaTec Group PLC has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down ConvaTec Group PLC's Dividend Yield and Growth
As of today, ConvaTec Group PLC currently has a 12-month trailing dividend yield of 1.73% and a 12-month forward dividend yield of 1.72%. This suggests an expectation of a slight decrease in dividend payments over the next 12 months.
Over the past three years, ConvaTec Group PLC's annual dividend growth rate was 6.80%. Extended to a five-year horizon, this rate decreased to 1.40% per year. Based on ConvaTec Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of ConvaTec Group PLC stock as of today is approximately 1.85%.
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, ConvaTec Group PLC's dividend payout ratio is 0.46.
ConvaTec Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ConvaTec Group PLC's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 7 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. ConvaTec Group PLC's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and ConvaTec Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. ConvaTec Group PLC's revenue has increased by approximately 5.50% per year on average, a rate that underperforms approximately 56.74% 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, ConvaTec Group PLC's earnings increased by approximately 6.00% per year on average, a rate that underperforms approximately 53.99% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -0.90%, which underperforms approximately 73.33% of global competitors.
Next Steps
In conclusion, while ConvaTec Group PLC's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics present a mixed picture, the company has demonstrated a commitment to returning value to shareholders through consistent dividends. The fair profitability and growth outlook suggest that ConvaTec Group PLC is maintaining a balance between rewarding shareholders and investing in future growth. Investors considering ConvaTec Group PLC for its dividend prospects should also weigh these factors and monitor the company's performance closely. Will ConvaTec Group PLC continue to provide sustainable dividends amidst its current financial and growth metrics? That remains a key question for value investors.
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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.
