An in-depth analysis of BAB Inc's dividend history, yield, and growth, and an assessment of its sustainability.
BAB Inc(BABB, Financial) recently announced a dividend of $0.01 per share, payable on 2023-10-18, with the ex-dividend date set for 2023-09-27. 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 BAB Incs dividend performance and assess its sustainability.
What Does BAB Inc Do?
BAB Inc franchises and licenses bagel and muffin retail units under the Big Apple Bagels, My Favorite Muffin, and SweetDuet trade names. The company also sells its trademark bagels, muffins and coffee through nontraditional channels of distribution including under licensing agreements with Kohr Bros. Frozen Custard and Green Beans Coffee. It has approximately 68 franchise units and 4 licensed units in operation in 20 states across the United States and one international location.
A Glimpse at BAB Inc's Dividend History
BAB Inc has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down BAB Inc's Dividend Yield and Growth
As of today, BAB Inc currently has a 12-month trailing dividend yield of 5.41% and a 12-month forward dividend yield of 5.41%. This suggests an expectation of same dividend payments over the next 12 months.
Extended to a five-year horizon, this rate decreased to -2.00% per year. And over the past decade, BAB Inc's annual dividends per share growth rate stands at -0.80%. Based on BAB Inc's dividend yield and five-year growth rate, the 5-year yield on cost of BAB Inc stock as of today is approximately 4.89%.
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 2023-05-31, BAB Inc's dividend payout ratio is 0.67.
BAB Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks BAB Inc's profitability 8 out of 10 as of 2023-05-31, 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. BAB Inc'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 BAB Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. BAB Inc's revenue has increased by approximately 2.30% per year on average, a rate that underperforms than approximately 65.56% of global competitors.
Next Steps
In conclusion, BAB Inc's consistent dividend payment record, robust profitability rank, and good growth rank indicate a sustainable dividend model. However, the company's declining dividend growth rate and average revenue growth rate suggest areas for improvement. As investors, it's crucial to keep an eye on these metrics for informed financial decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
