An in-depth look at Petronas Gas Bhd's dividend history, yield, growth, and sustainability
Petronas Gas Bhd (PNAGF, Financial) recently announced a dividend of $0.16 per share, payable on 2023-09-22, with the ex-dividend date set for 2023-09-11. 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 Petronas Gas Bhd's dividend performance and assess its sustainability.
Understanding Petronas Gas Bhd's Business Model
Petronas Gas Bhd is a Malaysian gas infrastructure and utilities company of which Malaysia's nationalized oil corporation, PETRONAS, holds a majority interest. Petronas Gas segments its primary operations into Gas Processing, Gas Transportation, Utilities, and Regasification businesses. While each of these contributes significantly to the company's total revenue, its Utilities and Gas Processing units combine to generate the majority. In Gas Processing, Petronas Gas receives processing fees under multi-year contracts by processing natural gas piped offshore for its parent company, PETRONAS. The Gas Transportation business encompasses the transmission of offshore natural gas through pipelines to customers in Malaysia and Singapore under multi-year agreements with PETRONAS.
A Glimpse at Petronas Gas Bhd's Dividend History
Petronas Gas Bhd has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Petronas Gas Bhd's Dividend Yield and Growth
As of today, Petronas Gas Bhd currently has a 12-month trailing dividend yield of 4.48% and a 12-month forward dividend yield of 4.46%. This suggests an expectation of decrease dividend payments over the next 12 months. Extended to a five-year horizon, this rate increased to 1.60% per year. And over the past decade, Petronas Gas Bhd's annual dividends per share growth rate stands at 4.30%. Based on Petronas Gas Bhd's dividend yield and five-year growth rate, the 5-year yield on cost of Petronas Gas Bhd stock as of today is approximately 4.85%.
Assessing Dividend Sustainability: 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 2023-06-30, Petronas Gas Bhd's dividend payout ratio is 0.81, which may suggest that the company's dividend may not be sustainable.
Petronas Gas Bhd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Petronas Gas Bhd's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Future Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. Petronas Gas Bhd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Petronas Gas Bhd's revenue has increased by approximately 4.10% per year on average, a rate that underperforms than approximately 68.46% 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, Petronas Gas Bhd's earnings increased by approximately -5.20% per year on average, a rate that underperforms than approximately 70.67% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -0.20%, which underperforms than approximately 66.27% of global competitors.
Conclusion
While Petronas Gas Bhd has demonstrated a consistent dividend payment record, the sustainability of its dividends is a topic of concern due to its high payout ratio. Despite this, the company's strong profitability rank and good growth trajectory offer a positive outlook. However, the company's underperformance in revenue and EPS growth relative to its global competitors may require further scrutiny. In conclusion, investors should consider these factors carefully when making decisions about Petronas Gas Bhd's dividends.
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