Assessing the Sustainability and Growth of Medifast Inc's Dividend
Medifast Inc (MED, Financial) recently announced a dividend of $1.65 per share, payable on 2023-11-07, with the ex-dividend date set for 2023-09-18. 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 Medifast Inc's dividend performance and assess its sustainability.
What Does Medifast Inc Do?
Medifast Inc is a United States-based company that produces, distributes, and sells products related to weight loss, weight management, and healthy living. The company generates its revenue from point of sale transactions executed over an e-commerce platform for weight loss, weight management, and other consumable health and nutritional products.
A Glimpse at Medifast Inc's Dividend History
Medifast Inc has maintained a consistent dividend payment record since 2015. Dividends are currently distributed on a quarterly basis.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Medifast Inc's Dividend Yield and Growth
As of today, Medifast Inc currently has a 12-month trailing dividend yield of 8.10% and a 12-month forward dividend yield of 8.13%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Medifast Inc's annual dividend growth rate was 24.70%. Extended to a five-year horizon, this rate increased to 35.90% per year.
Based on Medifast Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Medifast Inc stock as of today is approximately 37.55%.
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, Medifast Inc's dividend payout ratio is 0.54.
Medifast Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Medifast Inc's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Medifast Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Medifast Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Medifast Inc's revenue has increased by approximately 34.00% per year on average, a rate that outperforms approximately 94.95% 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, Medifast Inc's earnings increased by approximately 25.60% per year on average, a rate that outperforms approximately 69.74% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 41.60%, outperforms approximately 95.35% of global competitors.
In conclusion, Medifast Inc's consistent dividend payments, impressive growth rate, sustainable payout ratio, high profitability, and robust growth metrics make it a compelling option for investors seeking dividend income. However, as with all investments, it's crucial to conduct thorough research and consider various factors before making an investment decision.
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