Assessing the Sustainability and Growth of AptarGroup Inc's Dividends
AptarGroup Inc (ATR, Financial) recently announced a dividend of $0.41 per share, payable on 0000-00-00, 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 look into AptarGroup Inc's dividend performance and assess its sustainability.
What Does AptarGroup Inc Do?
Headquartered in Crystal Lake, Illinois, AptarGroup is a leading global supplier of dispensing systems such as aerosol valves, pumps, and closures to the consumer goods and pharmaceutical markets. With the bulk of its annual net sales coming from Europe (50% of sales) and the United States (33%), Aptar aims to increase its presence in Asia (10%) and Latin America (7%). Aptar's pharmaceutical division generates roughly one third of group sales but over two thirds of group profits.
A Glimpse at AptarGroup Inc's Dividend History
AptarGroup Inc has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a quarterly basis. AptarGroup Inc has increased its dividend each year since 1993. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 25 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down AptarGroup Inc's Dividend Yield and Growth
As of today, AptarGroup Inc currently has a 12-month trailing dividend yield of 1.21% and a 12-month forward dividend yield of 1.25%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, AptarGroup Inc's annual dividend growth rate was 2.30%. Extended to a five-year horizon, this rate increased to 3.70% per year. And over the past decade, AptarGroup Inc's annual dividends per share growth rate stands at 5.30%.
Based on AptarGroup Inc's dividend yield and five-year growth rate, the 5-year yield on cost of AptarGroup Inc stock as of today is approximately 1.45%.
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, AptarGroup Inc's dividend payout ratio is 0.35.
AptarGroup Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks AptarGroup Inc'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. AptarGroup Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and AptarGroup Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. AptarGroup Inc's revenue has increased by approximately 4.80% per year on average, a rate that underperforms approximately 57.86% 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, AptarGroup Inc's earnings increased by approximately -1.70% per year on average, a rate that underperforms approximately 63.45% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 0.90%, which underperforms approximately 70.43% of global competitors.
Next Steps
In conclusion, AptarGroup Inc's track record of consistent and growing dividend payments, coupled with a reasonable payout ratio and a strong profitability rank, portrays a positive outlook for dividend sustainability. However, the company's growth metrics, particularly the underperformance in revenue, EPS, and EBITDA growth rates compared to global competitors, may raise concerns about its future dividend growth potential. Investors should weigh these factors and consider the company's strategic initiatives and market position when evaluating AptarGroup Inc's dividend prospects. 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.
