An Insightful Look into CDW Corp's Dividend Sustainability and Growth
CDW Corp (CDW, Financial) recently announced a dividend of $0.62 per share, payable on 2024-06-11, with the ex-dividend date set for 2024-05-23. 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 CDW Corp's dividend performance and assess its sustainability.
What Does CDW Corp Do?
CDW Corp is a multi-brand provider of information technology ("IT") solutions to small, medium, and large business, government, education, and healthcare customers in the United States, the United Kingdom, and Canada. The company's broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that include on-premise and cloud capabilities across hybrid infrastructure, digital experience, and security. The company has three operating segments namely, Corporate, Small Business, and Public. The Corporate segment generates the majority of its revenue and primarily serves US private sector business customers with more than 250 employees.
A Glimpse at CDW Corp's Dividend History
CDW Corp has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. CDW Corp has increased its dividend each year since 2013. 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 11 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down CDW Corp's Dividend Yield and Growth
As of today, CDW Corp currently has a 12-month trailing dividend yield of 1.06% and a 12-month forward dividend yield of 1.09%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, CDW Corp's annual dividend growth rate was 15.80%. Extended to a five-year horizon, this rate increased to 19.90% per year. And over the past decade, CDW Corp's annual dividends per share growth rate stands at an impressive 40.80%.
Based on CDW Corp's dividend yield and five-year growth rate, the 5-year yield on cost of CDW Corp stock as of today is approximately 2.63%.
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, CDW Corp's dividend payout ratio is 0.27.
CDW Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CDW Corp'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. CDW Corp'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 CDW Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CDW Corp's revenue has increased by approximately 7.10% per year on average, a rate that underperforms than approximately 54.57% 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, CDW Corp's earnings increased by approximately 21.90% per year on average, a rate that underperforms than approximately 33.37% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.10%, which underperforms than approximately 32.11% of global competitors.
Next Steps
With a strong track record of dividend payments, consistent growth in dividend rates, and robust profitability metrics, CDW Corp appears well-positioned to continue rewarding its shareholders. The company's strategic initiatives and operational efficiency further bolster confidence in its dividend sustainability. For investors seeking dividend growth stocks with stable payouts, CDW Corp presents a compelling case. Interested in exploring more high-dividend yield opportunities? 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.
