An Analysis of the Medical Device Manufacturer's Dividend History, Yield, and Sustainability
Cochlear Ltd (CHEOY, Financial) recently announced a dividend of $0.57 per share, payable on 2023-10-26, with the ex-dividend date set for 2023-09-15. 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 Cochlear Ltd's dividend performance and assess its sustainability.
What Does Cochlear Ltd Do?
Cochlear Ltd is the leading cochlear implant device manufacturer with around 60% global market share. Developed markets contribute 80% of group revenue where cochlear implants are the standard of care for children with severe to profound hearing loss. The company also actively targets the growing cohort of seniors in developed markets. Tender-oriented emerging markets contribute the remaining 20% of group revenue. Main products include cochlear implants, bone-anchored hearing aids, and associated sound processors. In fiscal 2020, 49% of revenue came from the Americas, 35% from Europe, the Middle East, and Africa, and 16% from the Asia-Pacific segment.
A Glimpse at Cochlear Ltd's Dividend History
Cochlear Ltd 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 Cochlear Ltd's Dividend Yield and Growth
As of today, Cochlear Ltd currently has a 12-month trailing dividend yield of 1.15% and a 12-month forward dividend yield of 1.28%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Cochlear Ltd's annual dividend growth rate was 19.70%. Extended to a five-year horizon, this rate decreased to -0.80% per year. And over the past decade, Cochlear Ltd's annual dividends per share growth rate stands at -0.50%.
Based on Cochlear Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Cochlear Ltd stock as of today is approximately 1.10%.
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 2023-06-30, Cochlear Ltd's dividend payout ratio is 0.65.
Cochlear Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cochlear Ltd's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Cochlear Ltd'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 Cochlear Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cochlear Ltd's revenue has increased by approximately 9.90% per year on average, a rate that outperforms approximately 58.08% of global competitors.
Conclusion
Given Cochlear Ltd's consistent dividend payments, respectable growth rate, reasonable payout ratio, and strong profitability, the company appears to have a sustainable dividend policy. However, investors should continue to monitor these metrics and the company's overall performance to ensure the sustainability of future dividends.
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