Assessing Herc Holdings Inc's Dividend Sustainability and Growth
Herc Holdings Inc (HRI, Financial) recently announced a dividend of $0.67 per share, payable on 2024-03-07, with the ex-dividend date set for 2024-02-20. 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 Herc Holdings Inc's dividend performance and assess its sustainability.
What Does Herc Holdings Inc Do?
Herc Holdings is an equipment rental company that was spun out of Hertz Global in 2016. It is currently the third-largest equipment rental company (4% market share) in North America, after United Rentals and Sunbelt Rentals, with a fleet size of $6.2 billion. It serves commercial and residential construction customers, the environmental sector, industrial entities, and entertainment production companies. During much of its 50-year-plus history, the company has rented equipment such as aerial lifts to its customers for intermittent use. More recently, it has broadened its catalog to include a host of specialty items. Separately, Herc Holdings' strategy now incorporates long-term rentals to industrial customers where Herc maintains its own staff at the customer site.
A Glimpse at Herc Holdings Inc's Dividend History
Herc Holdings Inc has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Herc Holdings Inc's Dividend Yield and Growth
As of today, Herc Holdings Inc currently has a 12-month trailing dividend yield of 1.72% and a 12-month forward dividend yield of 1.80%. This suggests an expectation of increased dividend payments over the next 12 months. Based on Herc Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Herc Holdings Inc stock as of today is approximately 1.72%.
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 2023-12-31, Herc Holdings Inc's dividend payout ratio is 0.21.
Herc Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Herc Holdings Inc's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Herc Holdings 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 Herc Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Herc Holdings Inc's revenue has increased by approximately 23.60% per year on average, a rate that outperforms approximately 86.74% 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, Herc Holdings Inc's earnings increased by approximately 60.60% per year on average, a rate that outperforms approximately 89.65% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 48.90%, which outperforms approximately 94.04% of global competitors.
Next Steps
In conclusion, Herc Holdings Inc's dividend payments, supported by a solid dividend history and a reasonable payout ratio, appear sustainable. The company's strong profitability and impressive growth metrics bode well for the future, potentially leading to continued dividend growth. These factors make Herc Holdings Inc an interesting prospect for value investors focused on dividend income. Will Herc Holdings Inc continue to deliver shareholder value through consistent dividend growth? Only time will tell, but the indicators seem promising. 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.
