Assessing the Sustainability of Heineken NV's Upcoming Dividend
Heineken NV (HEINY, Financial) recently announced a dividend of $0.56 per share, payable on 2024-05-14, with the ex-dividend date set for 2024-04-29. 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 Heineken NV's dividend performance and assess its sustainability.
What Does Heineken NV Do?
Heineken sold 243 million hectoliters of beer in 2023, and is the world's second-largest brewer behind Anheuser-Busch InBev. It has the leading position in many European markets, including the Netherlands, Austria, Greece, and Italy. Its flagship brand, Heineken, is the world's leading international premium lager by volume and has spawned several brand extensions including Heineken 0.0 and Heineken Silver. Heineken is the world's biggest cider producer, and its portfolio also includes brands in the nonalcoholic, Belgian, and craft beer categories.
A Glimpse at Heineken NV's Dividend History
Heineken NV has maintained a consistent dividend payment record since 1996. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Heineken NV's Dividend Yield and Growth
As of today, Heineken NV currently has a 12-month trailing dividend yield of 2.15% and a 12-month forward dividend yield of 1.91%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Heineken NV's annual dividend growth rate was 22.70%. Extended to a five-year horizon, this rate decreased to 2.10% per year. And over the past decade, Heineken NV's annual dividends per share growth rate stands at 4.40%.
Based on Heineken NV's dividend yield and five-year growth rate, the 5-year yield on cost of Heineken NV stock as of today is approximately 2.39%.
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, Heineken NV's dividend payout ratio is 0.41.
Heineken NV's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Heineken NV's profitability 7 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. Heineken NV's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Heineken NV's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Heineken NV's revenue has increased by approximately 16.30% per year on average, a rate that outperforms approximately 78.82% 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, Heineken NV's earnings increased by approximately 32.70% per year on average, a rate that outperforms approximately 76.57% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.30%, which outperforms approximately 44.44% of global competitors.
Concluding Thoughts on Heineken NV's Dividend Prospects
Heineken NV's consistent dividend history, coupled with a reasonable payout ratio, paints a picture of a company committed to rewarding its shareholders while maintaining the financial flexibility to fuel future growth. With a profitability rank that indicates strong earnings power and growth metrics that suggest a favorable outlook, the brewer appears well-positioned to continue its dividend payments. However, investors should monitor the forward dividend yield and other financial health indicators to ensure their investment aligns with their income objectives and risk profile. As always, conducting thorough research and staying informed on market conditions will be crucial for investors navigating the dynamic landscape of dividend investing.
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.
