Assessing the Sustainability and Growth of Levi Strauss & Co's Dividend
Levi Strauss & Co (LEVI, Financial) recently announced a dividend of $0.12 per share, payable on 2023-11-09, with the ex-dividend date set for 2023-10-25. 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 look into Levi Strauss & Co's dividend performance and assess its sustainability.
What Does Levi Strauss & Co Do?
Levi Strauss & Co is involved in designing, marketing, and selling products that include jeans, casual and dresses pants, tops, shorts, skirts, jackets, footwear, and related accessories directly or through third parties and licensees for men, women, and children under Levi's, Dockers, Signature by Levi Strauss & Co. and Denizen brands. The company manages its business according to three regional segments: the Americas, which is the key revenue driver; Europe; and Asia.
A Glimpse at Levi Strauss & Co's Dividend History
Levi Strauss & Co has maintained a consistent dividend payment record since 2019. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Levi Strauss & Co's Dividend Yield and Growth
As of today, Levi Strauss & Co currently has a 12-month trailing dividend yield of 3.46% and a 12-month forward dividend yield of 3.46%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, Levi Strauss & Co's annual dividend growth rate was 43.10%. Based on Levi Strauss & Co's dividend yield and five-year growth rate, the 5-year yield on cost of Levi Strauss & Co stock as of today is approximately 3.46%.
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 2023-08-31, Levi Strauss & Co's dividend payout ratio is 0.70, which may suggest that the company's dividend may not be sustainable. Levi Strauss & Co's profitability rank is 7 out of 10 as of 2023-08-31, suggesting good profitability prospects. The company has reported net profit in 8 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Levi Strauss & Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Levi Strauss & Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Levi Strauss & Co's revenue has increased by approximately 2.70% per year on average, a rate that underperforms than approximately 50.15% 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, Levi Strauss & Co's earnings increased by approximately 13.30% per year on average, a rate that underperforms than approximately 46.92% of global competitors.
Next Steps
In conclusion, while Levi Strauss & Co's consistent dividend payments and growth rates are promising, the sustainability of these dividends is questionable due to a relatively high payout ratio. However, with a strong profitability rank and reasonable growth metrics, the company may still be a suitable choice for dividend-focused investors. It's crucial for investors to continue monitoring these factors closely. 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.
