Understanding the Dividend Performance and Sustainability of Atlas Copco AB
Atlas Copco AB (ATLKY, Financial) recently announced a dividend of $0.11 per share, payable on a date yet to be specified, with the ex-dividend date set for 2023-10-19. As investors anticipate this forthcoming payment, the focus also turns to the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, we delve into Atlas Copco AB's dividend performance and assess its sustainability.
What Does Atlas Copco AB Do?
Atlas Copco is a 140-year-old Swedish company and a pioneer in air compression technology. Today, the company remains the world's leading air compressor manufacturer, with around 25% market share. Its product portfolio includes power tools and vacuum pumps, with the semiconductor chip cycle being a key demand driver for the latter. The company's revenue comes from three sources: initial equipment sales, spare parts, and maintenance. With operations spanning 180 countries, Atlas Copco AB is a global player in the industry.
A Glimpse at Atlas Copco AB's Dividend History
Atlas Copco AB has maintained a consistent dividend payment record since 2003, currently distributing dividends on a bi-annual basis. The chart below shows annual Dividends Per Share for tracking historical trends.
Breaking Down Atlas Copco AB's Dividend Yield and Growth
As of today, Atlas Copco AB boasts a trailing dividend yield of 1.46% and a forward dividend yield of 1.64%, indicating an expected increase in dividend payments over the coming year. Over the past three years, the company's annual dividend growth rate was 6.50%. However, when extended to a five-year horizon, this rate decreased to -4.20% per year. Despite this, over the past decade, Atlas Copco AB's annual dividends per share growth rate stands at 4.60%.
Based on Atlas Copco AB's dividend yield and five-year growth rate, the 5-year yield on cost of Atlas Copco AB stock as of today is approximately 1.18%.
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, Atlas Copco AB's dividend payout ratio is 0.39.
Atlas Copco AB's profitability rank of 8 out of 10, as of 2023-06-30, suggests 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. Atlas Copco AB's growth rank of 8 out of 10 suggests a good growth trajectory relative to its competitors. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model, outperforming approximately 63.08% of global competitors. Atlas Copco AB's 3-year EPS growth rate and 5-year EBITDA growth rate further showcase its capability to grow its earnings, a critical component for sustaining dividends in the long run.
Conclusion
Atlas Copco AB's consistent dividend payments, solid growth rate, low payout ratio, high profitability, and impressive growth metrics suggest a promising future for the company's dividends. However, investors should continue to monitor these factors to ensure the sustainability of the dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
