Assessing the Sustainability of Fastenal Co's Upcoming Dividend
Fastenal Co (FAST, Financial) recently announced a dividend of $0.39 per share, payable on 2024-02-29, with the ex-dividend date set for 2024-01-31. 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 Fastenal Co's dividend performance and assess its sustainability.
What Does Fastenal Co Do?
Fastenal opened its first fastener store in 1967 in Winona, Minnesota. Since then, Fastenal Co has greatly expanded its footprint as well as its products and services. Today, Fastenal serves its 400,000 active customers through approximately 1,600 branches, over 1,700 on-site locations, and 14 distribution centers. Since 1993, the company has added other product categories, but fasteners remain its largest category at about 30%-35% of sales. Fastenal also offers customers supply-chain solutions, such as vending and vendor-managed inventory.
A Glimpse at Fastenal Co's Dividend History
Fastenal Co has maintained a consistent dividend payment record since 1991, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1991, earning it the title of a dividend aristocrat. Below is a chart showing the annual Dividends Per Share to track historical trends.
Breaking Down Fastenal Co's Dividend Yield and Growth
As of today, Fastenal Co boasts a 12-month trailing dividend yield of 2.03% and a 12-month forward dividend yield of 2.25%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, Fastenal Co's annual dividend growth rate was 11.90%, which further increased to 12.60% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at an impressive 12.90%. Based on Fastenal Co's dividend yield and five-year growth rate, the 5-year yield on cost of Fastenal Co stock as of today is approximately 3.67%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. Fastenal Co's dividend payout ratio is currently 0.69 as of 2023-12-31, suggesting a healthy balance between distributing earnings and retaining funds for future growth. The company's profitability rank is also impressive, with a perfect score of 10 out of 10, indicating good profitability prospects and a decade-long streak of positive net income.
Growth Metrics: The Future Outlook
Robust growth metrics are crucial for the sustainability of dividends. Fastenal Co's growth rank of 10 out of 10 suggests a strong growth trajectory. Its revenue per share and 3-year revenue growth rate, which has outperformed approximately 57.04% of global competitors, indicates a solid revenue model. Additionally, Fastenal Co's 3-year EPS growth rate outperforms approximately 32.2% of global peers. Lastly, the 5-year EBITDA growth rate outperforms approximately 38.37% of global competitors, further underscoring the company's strong growth prospects.
Concluding Thoughts on Fastenal Co's Dividend
In conclusion, Fastenal Co's consistent dividend growth, reasonable payout ratio, and robust profitability and growth metrics paint a promising picture for investors seeking dividend income. With its strong historical performance and positive future outlook, Fastenal Co remains a compelling option for value investors focused on dividends. As investors anticipate the upcoming dividend payment, they can also utilize tools like the High Dividend Yield Screener available to GuruFocus Premium members to explore other high-dividend yield opportunities.
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.
