Exploring FedEx Corp's Dividend History, Yield, Growth Rate, and Sustainability
FedEx Corp (FDX, Financial) recently announced a dividend of $1.26 per share, payable on 2023-10-02, with the ex-dividend date set for 2023-09-08. 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 deep dive into FedEx Corp's dividend performance and assess its sustainability.
Understanding FedEx Corp's Business Model
FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2023, which ended May 2023, FedEx derived 47% of revenue from its express division, 37% from ground, and 11% from freight, its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth-largest global parcel delivery provider.
Tracing FedEx Corp's Dividend History
FedEx Corp has maintained a consistent dividend payment record since 2002. Dividends are currently distributed on a quarterly basis. FedEx Corp has increased its dividend each year since 2008. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 15 years.
Deciphering FedEx Corp's Dividend Yield and Growth
As of today, FedEx Corp currently has a 12-month trailing dividend yield of 1.85% and a 12-month forward dividend yield of 1.89%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, FedEx Corp's annual dividend growth rate was 20.90%. Extended to a five-year horizon, this rate decreased to 14.00% per year. And over the past decade, FedEx Corp's annual dividends per share growth rate stands at an impressive 23.10%.
Based on FedEx Corp's dividend yield and five-year growth rate, the 5-year yield on cost of FedEx Corp stock as of today is approximately 3.56%.
Evaluating FedEx Corp's Dividend Sustainability
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 2023-05-31, FedEx Corp's dividend payout ratio is 0.30.
FedEx Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks FedEx Corp's profitability 8 out of 10 as of 2023-05-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Assessing FedEx Corp's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. FedEx Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and FedEx Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. FedEx Corp's revenue has increased by approximately 10.10% per year on average, a rate that outperforms than approximately 62.56% 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, FedEx Corp's earnings increased by approximately 46.70% per year on average, a rate that outperforms than approximately 76.39% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.60%, which outperforms than approximately 71.46% of global competitors.
Conclusion
With a consistent dividend payment history, a promising dividend growth rate, and a healthy payout ratio, FedEx Corp presents a compelling case for dividend investors. The company's robust profitability and growth metrics further reinforce the sustainability of its dividends. However, like any investment, it's crucial to continue monitoring these metrics in line with broader industry trends and company-specific developments.
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