Understanding INGR's Dividend History, Yield, Growth, and Sustainability
Ingredion Inc (INGR, Financial) recently announced a dividend of $0.78 per share, payable on 2023-10-24, with the ex-dividend date set for 2023-09-29. 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 Ingredion Inc's dividend performance and assess its sustainability.
What Does Ingredion Inc Do?
Ingredion manufactures ingredients for the food and beverage industries, which make up around 70% of sales. The remaining sales come from the paper, personal-care, and animal nutrition industries. Value-added, specialty ingredients account for a little over one third of sales, with the balance being commodity-grade ingredients. With the majority of sales outside the U.S., Ingredion is a global player with good exposure to developing markets, including Latin America and Asia-Pacific.
A Glimpse at Ingredion Inc's Dividend History
Ingredion Inc has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a quarterly basis. Ingredion Inc has increased its dividend each year since 1998. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 25 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ingredion Inc's Dividend Yield and Growth
As of today, Ingredion Inc currently has a 12-month trailing dividend yield of 2.92% and a 12-month forward dividend yield of 3.21%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Ingredion Inc's annual dividend growth rate was 2.70%. Extended to a five-year horizon, this rate increased to 3.60% per year. And over the past decade, Ingredion Inc's annual dividends per share growth rate stands at 9.20%.
Based on Ingredion Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ingredion Inc stock as of today is approximately 3.48%.
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, Ingredion Inc's dividend payout ratio is 0.33.
Ingredion Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ingredion Inc'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.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Ingredion 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 Ingredion Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ingredion Inc's revenue has increased by approximately 8.80% per year on average, a rate that outperforms than approximately 57.95% 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, Ingredion Inc's earnings increased by approximately 6.20% per year on average, a rate that outperforms than approximately 47.23% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -10.30%, which outperforms than approximately 18% of global competitors.
Next Steps
Considering Ingredion Inc's consistent dividend payments, impressive growth rate, reasonable payout ratio, high profitability, and solid growth metrics, it appears that the company's dividends are not only sustainable but also poised for growth. This comprehensive analysis suggests that Ingredion Inc remains an attractive option for value investors seeking steady dividend income. However, as with any investment, it's crucial to do your due diligence and consider your financial goals and risk tolerance before making a decision.
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