An In-depth Look into Investor AB's Dividend Performance and Sustainability
Investor AB (IVSBF, Financial) recently announced a dividend of $1.1 per share, payable on 2023-11-09, with the ex-dividend date set for 2023-11-03. 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 delve into Investor AB's dividend performance and assess its sustainability.
Understanding Investor AB's Business Model
Investor AB is an industrial holding company with a long-term, active investment portfolio strategy. The company focuses on investing in companies that emphasize innovation and product development. Investor AB's "buy-to-build" strategy seeks not to divest holdings, but rather to develop them over time in order to close the gap between price and value. A majority of its equity investments are made in Sweden and greater Scandinavia, where the company primarily operates. The company measures performance by changes in net asset value and seeks to outperform the Stockholm Stock Exchange's OMSX Index. In 2015, Investor AB also formed and currently operates Patricia Industries, a sizable component of the company that was formed to manage its unlisted investments.
Investor AB's Dividend History at a Glance
Investor AB has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Investor AB's Dividend Yield and Growth Rate
As of today, Investor AB currently has a 12-month trailing dividend yield of 2.30% and a 12-month forward dividend yield of 2.38%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Investor AB's annual dividend growth rate was 7.20%. Extended to a five-year horizon, this rate decreased to 5.80% per year. And over the past decade, Investor AB's annual dividends per share growth rate stands at 8.50%.
Based on Investor AB's dividend yield and five-year growth rate, the 5-year yield on cost of Investor AB stock as of today is approximately 3.05%.
Investor AB's Dividend Sustainability
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 2023-09-30, Investor AB's dividend payout ratio is 0.11.
Investor AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Investor AB's profitability 3 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 8 years out of the past 10 years.
Future Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. Investor AB's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Conclusion
While Investor AB has a consistent dividend payment record and a reasonable yield, its payout ratio and growth metrics raise concerns about the sustainability of its dividends in the long run. Investors should consider these factors when making investment 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.
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