Understanding the Dividend Dynamics of Contact Energy Ltd (COENF, Financial)
Contact Energy Ltd (COENF) recently announced a dividend of $0.14 per share, payable on 2024-03-18, with the ex-dividend date set for 2024-02-26. 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 Contact Energy Ltd's dividend performance and assess its sustainability.
What Does Contact Energy Ltd Do?
Contact Energy is a diversified and integrated energy company. It owns a fleet of hydro, geothermal, and gas-fired generation assets, which produce close to 25% of New Zealand's electricity. It also retails electricity and gas to nearly half a million customers.
A Glimpse at Contact Energy Ltd's Dividend History
Contact Energy Ltd has maintained a consistent dividend payment record since 2020. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Contact Energy Ltd's Dividend Yield and Growth
As of today, Contact Energy Ltd currently has a 12-month trailing dividend yield of 4.51% and a 12-month forward dividend yield of 3.64%. This suggests an expectation of decreased dividend payments over the next 12 months.
Based on Contact Energy Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Contact Energy Ltd stock as of today is approximately 4.51%.
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 2023-06-30, Contact Energy Ltd's dividend payout ratio is 2.66, and this may suggest that the company's dividend may not be sustainable.
Contact Energy Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Contact Energy Ltd's profitability 6 out of 10 as of 2023-06-30, suggesting fair profitability. 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. Contact Energy Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Contact Energy Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Contact Energy Ltd's revenue has increased by approximately -2.40% per year on average, a rate that underperforms approximately 76.44% of global competitors.
Conclusion: Evaluating Contact Energy Ltd's Dividend Prospects
When it comes to dividends, investors seek both stability and growth. Contact Energy Ltd's consistent dividend history and reasonable yield are appealing, but the anticipated decrease in dividend payments and the payout ratio raise questions about sustainability. With a profitability rank that suggests fair earnings capacity, and a growth rank indicating potential, investors should weigh these factors carefully. The revenue model's performance, albeit lagging some global competitors, adds another layer to consider. Ultimately, value investors must decide if Contact Energy Ltd's current dividend strategy aligns with their long-term investment goals. 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.
