Understanding the Dividend Performance and Sustainability of Ally Financial Inc
Ally Financial Inc (ALLY, Financial) recently announced a dividend of $0.3 per share, payable on 2023-11-15, with the ex-dividend date set for 2023-10-31. As investors anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. With data from GuruFocus, we delve into Ally Financial Inc's dividend performance and evaluate its sustainability.
About Ally Financial Inc
Formerly the financial arm of General Motors, Ally Financial Inc became an independent publicly traded firm in 2014. As one of the largest consumer auto lenders in the U.S., over 70% of its loan book is in consumer auto loans and dealer financing. Ally Financial Inc also offers auto insurance, personal loans, commercial loans, credit cards, and holds a portfolio of mortgage debt. The bank's diversified business model also includes brokerage services.
An Overview of Ally Financial Inc's Dividend History
Since 2016, Ally Financial Inc has maintained a consistent dividend payment record, with dividends distributed on a quarterly basis. The chart below illustrates the annual Dividends Per Share for tracking historical trends.
Ally Financial Inc's Dividend Yield and Growth
As of today, Ally Financial Inc has a 12-month trailing dividend yield and a 12-month forward dividend yield of 5.02%, suggesting an expectation of consistent dividend payments over the next 12 months.
Over the past three years, Ally Financial Inc's annual dividend growth rate was 20.80%. This rate increased to 22.00% per year when extended to a five-year horizon. Based on Ally Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ally Financial Inc stock as of today is approximately 13.57%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, it's crucial to examine the company's payout ratio. The dividend payout ratio offers 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, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-09-30, Ally Financial Inc's dividend payout ratio is 0.32.
Ally Financial Inc's profitability rank, which is 5 out of 10 as of 2023-09-30, suggests fair profitability. The company has reported positive net income each year over the past decade, further solidifying its high profitability.
Future Prospects: Growth Metrics
Ally Financial Inc's growth rank of 5 out of 10 suggests a fair growth outlook. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average increase of approximately 16.20% per year. This rate outperforms approximately 71.49% of global competitors.
Ally Financial Inc's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. Over the past three years, the company's earnings increased by approximately 5.00% per year on average, outperforming approximately 43.32% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 22.90% outperforms approximately 77.61% of global competitors.
Conclusion
Ally Financial Inc has demonstrated a consistent dividend payment record, a fair growth outlook, and a solid profitability rank. With a reasonable payout ratio and robust growth metrics, the company appears well-positioned to sustain its dividends in the long term. However, investors should continue to monitor these factors to make informed decisions. 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.
