Exploring the Sustainability and Growth of Investor AB's Dividends
Investor AB (IVSBF, Financial) recently announced a dividend of $3.6 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-05-08. 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 Investor AB's dividend performance and assess its sustainability.
What Does Investor AB Do?
Investor AB is an industrial holding company with a long-term, active investment portfolio strategy. The company focuses on investing in companies that emphasize innovation and product development. Investor AB's so-called "buy-to-build" strategy seeks not to divest holdings, but rather to develop them over time in order to close the gap between price and value. A majority of its equity investments are made in the country of Sweden and Scandinavia, where the company mostly operates.
A Glimpse at Investor AB's Dividend History
Investor AB has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Investor AB's Dividend Yield and Growth
As of today, Investor AB currently has a 12-month trailing dividend yield of 1.68% and a 12-month forward dividend yield of 1.81%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Investor AB's annual dividend growth rate was 25.10%. Extended to a five-year horizon, this rate decreased to 8.90% per year. And over the past decade, Investor AB's annual dividends per share growth rate stands at 8.20%.
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 2024-03-31, Investor AB's dividend payout ratio is 0.08.
Investor AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Investor AB's profitability 3 out of 10 as of 2024-03-31, suggesting the dividend may not be sustainable. The company has reported net profit in 8 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. Investor AB's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Investor AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Investor AB's revenue has increased by approximately 26.80% per year on average, a rate that outperforms approximately 71.83% 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, Investor AB's earnings increased by approximately 34.00% per year on average, a rate that outperforms approximately 76.83% of global competitors.
Next Steps
While Investor AB shows promising revenue and earnings growth, its low profitability and growth ranks raise concerns about the long-term sustainability of its dividends. Investors should monitor these metrics closely, alongside the company's strategic initiatives to enhance shareholder value. For those seeking to explore further, 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.
