Delving into Iberdrola SA's Dividend Sustainability and Growth Prospects
Iberdrola SA (IBDRY, Financial) recently announced a dividend of $0.87 per share, payable on 2024-02-13, with the ex-dividend date set for 2024-01-09. 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 Iberdrola SA's dividend performance and assess its sustainability.
What Does Iberdrola SA Do?
Iberdrola is one of the largest utilities in the world with electric utility operations in nearly 40 countries. The company has a 54-gigawatt portfolio of hydro, wind, natural gas, and nuclear power plants. It is the largest owner of wind farms in the world, representing nearly 40% of its portfolio. Although the company has recently developed or acquired distribution and power generation assets in other geographic areas, Spain is still home to around 50% of its power generation capacity. Iberdrola also owns and operates electricity and distribution networks in Spain, the U.K., Brazil, and the U.S.
A Glimpse at Iberdrola SA's Dividend History
Iberdrola SA has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Iberdrola SA's Dividend Yield and Growth
As of today, Iberdrola SA currently has a 12-month trailing dividend yield of 2.68% and a 12-month forward dividend yield of 4.30%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Iberdrola SA's annual dividend growth rate was 21.10%. Extended to a five-year horizon, this rate increased to 22.90% per year. And over the past decade, Iberdrola SA's annual dividends per share growth rate stands at an impressive 22.90%.
Based on Iberdrola SA's dividend yield and five-year growth rate, the 5-year yield on cost of Iberdrola SA stock as of today is approximately 7.51%.
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 2023-09-30, Iberdrola SA's dividend payout ratio is 0.69.
Iberdrola SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Iberdrola SA's profitability 8 out of 10 as of 2023-09-30, 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. Iberdrola SA's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Iberdrola SA's revenue has increased by approximately 15.20% per year on average, a rate that outperforms approximately 74.07% 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, Iberdrola SA's earnings increased by approximately 11.10% per year on average, a rate that outperforms approximately 67.05% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.30%, which outperforms approximately 58.24% of global competitors.
Conclusion: Evaluating Iberdrola SA's Dividend Future
In conclusion, Iberdrola SA's dividend payments, bolstered by a strong dividend growth rate, reasonable payout ratio, and robust profitability and growth metrics, present a compelling case for investors seeking stable income streams. The company's strategic position in the renewable energy sector, combined with its expansive global operations, underscores the potential for continued dividend growth and sustainability. As the energy landscape evolves with an increasing focus on sustainability, Iberdrola SA's commitment to renewable energy may further enhance its attractiveness to value investors. Will Iberdrola SA continue to light up the portfolios of dividend investors? Only time will tell, but the indicators certainly shine brightly.
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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.
