Assessing the Sustainability of Icahn Enterprises LP's Upcoming Dividend
Icahn Enterprises LP (IEP, Financial) recently announced a dividend of $1 per share, payable on 2024-04-18, with the ex-dividend date set for 2024-03-08. 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 Icahn Enterprises LP's dividend performance and assess its sustainability.
What Does Icahn Enterprises LP Do?
Icahn Enterprises LP is a provider of diversified business services in the United States. The company operates its business through varied segments which include Investment, Automotive, Energy, Food Packaging, Real Estate, Pharma, and Home Fashion. Among these, the Energy segment derives the maximum revenue from the company. Geographically, it generates maximum revenue from the United States.
A Glimpse at Icahn Enterprises LP's Dividend History
Icahn Enterprises LP has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a quarterly basis. Icahn Enterprises LP has increased its dividend each year since 2012. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 12 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Icahn Enterprises LP's Dividend Yield and Growth
As of today, Icahn Enterprises LP currently has a 12-month trailing dividend yield of 30.40% and a 12-month forward dividend yield of 20.33%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, Icahn Enterprises LP's annual dividend growth rate was -9.10%. Extended to a five-year horizon, this rate increased to -2.20% per year. And over the past decade, Icahn Enterprises LP's annual dividends per share growth rate stands at 4.10%.
Based on Icahn Enterprises LP's dividend yield and five-year growth rate, the 5-year yield on cost of Icahn Enterprises LP stock as of today is approximately 27.20%.
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, Icahn Enterprises LP's dividend payout ratio is 2.60, which may suggest that the company's dividend may not be sustainable. Icahn Enterprises LP's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Icahn Enterprises LP's profitability 3 out of 10 as of 2023-12-31, suggesting the dividend may not be sustainable. The company has reported net profit in 2 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. Icahn Enterprises LP's growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Icahn Enterprises LP's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Icahn Enterprises LP's revenue has increased by approximately -2.60% per year on average, a rate that underperforms than approximately 76.2% of global competitors.
Next Steps
Considering Icahn Enterprises LP's consistent dividend history and its status as a dividend achiever, the company has demonstrated a commitment to returning value to shareholders. However, the negative dividend growth rates and low profitability and growth ranks raise concerns about the long-term sustainability of these payments. Value investors must weigh the attractive yields against the potential risks associated with the company's financial health and growth prospects. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find more opportunities for income-generating investments.
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.
