Delving into Hexagon AB's Dividend Performance and Sustainability
Hexagon AB (HXGBY, Financial) recently announced a dividend of $0.14 per share, payable on 2024-05-28, with the ex-dividend date set for 2024-05-01. 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 Hexagon AB's dividend performance and assess its sustainability.
What Does Hexagon AB Do?
Hexagon AB provides information technology for industrial applications. It offers solutions in two segments namely geospatial enterprise solutions and industrial enterprise solutions. Each segment contributes roughly half of the firm's overall revenue. Hexagon's geospatial solutions are used for infrastructure, mining, agriculture, and public safety. The industrial enterprise solutions are used to measure and inspect the quality of complex parts used in manufacturing processes. Hexagon's largest geographic markets are Americas and EMEA, with each market contributing more than a fourth of the firm's overall revenue.
A Glimpse at Hexagon AB's Dividend History
Hexagon AB has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a yearly basis.
Hexagon AB 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 Hexagon AB's Dividend Yield and Growth
As of today, Hexagon AB currently has a 12-month trailing dividend yield of 1.19% and a 12-month forward dividend yield of 1.26%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Hexagon AB's annual dividend growth rate was 14.20%. Extended to a five-year horizon, this rate decreased to 11.20% per year. And over the past decade, Hexagon AB's annual dividends per share growth rate stands at an impressive 13.70%.
Based on Hexagon AB's dividend yield and five-year growth rate, the 5-year yield on cost of Hexagon AB stock as of today is approximately 2.02%.
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 2024-03-31, Hexagon AB's dividend payout ratio is 0.37.
Hexagon AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Hexagon AB's profitability 9 out of 10 as of 2024-03-31, 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. Hexagon AB's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Hexagon AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Hexagon AB's revenue has increased by approximately 14.70% per year on average, a rate that outperforms approximately 78.86% 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, Hexagon AB's earnings increased by approximately 7.80% per year on average, a rate that outperforms approximately 47.61% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.90%, which outperforms approximately 44.44% of global competitors.
Next Steps
In conclusion, Hexagon AB's consistent dividend payments, robust dividend growth rate, prudent payout ratio, strong profitability, and solid growth metrics paint a promising picture for value investors. With a dividend policy that has rewarded shareholders over the years, and fundamentals that suggest continued ability to do so, Hexagon AB stands out as a potential candidate for those seeking stable dividend income with growth potential. Investors considering Hexagon AB should weigh these factors in light of their investment strategy and the broader market context. Will Hexagon AB continue its trajectory of rewarding shareholders amidst the ever-changing economic landscape? Only time will tell, but the current indicators are certainly encouraging.
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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.
