Understanding the Dividend Dynamics of Tractor Supply Co (TSCO, Financial)
Tractor Supply Co (TSCO) recently announced a dividend of $1.1 per share, payable on 2024-03-12, with the ex-dividend date set for 2024-02-23. 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 Tractor Supply Co's dividend performance and assess its sustainability.
What Does Tractor Supply Co Do?
Tractor Supply is the largest operator of retail farm and ranch stores in the United States. The company targets recreational farmers and ranchers and has little exposure to commercial and industrial farm operations. Currently, the company operates 2,216 of its namesake banners in 49 states, including 81 Orscheln Farm and Home stores (rebranded as Tractor Supply), along with 198 Petsense by Tractor Supply stores. Stores are generally concentrated in rural communities, as opposed to urban and suburban areas. In fiscal 2022, revenue consisted primarily of livestock and pet (50%), hardware, tools, and truck (19%), and seasonal gift and toy (21%).
A Glimpse at Tractor Supply Co's Dividend History
Tractor Supply Co has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a quarterly basis. Tractor Supply Co has increased its dividend each year since 2010. 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 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Tractor Supply Co's Dividend Yield and Growth
As of today, Tractor Supply Co currently has a 12-month trailing dividend yield of 1.75% and a 12-month forward dividend yield of 1.88%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Tractor Supply Co's annual dividend growth rate was 40.00%. Extended to a five-year horizon, this rate decreased to 31.10% per year. And over the past decade, Tractor Supply Co's annual dividends per share growth rate stands at an impressive 22.20%. Based on Tractor Supply Co's dividend yield and five-year growth rate, the 5-year yield on cost of Tractor Supply Co stock as of today is approximately 6.78%.
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, Tractor Supply Co's dividend payout ratio is 0.41.
Tractor Supply Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Tractor Supply Co's profitability 10 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each 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. Tractor Supply Co's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Tractor Supply Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Tractor Supply Co's revenue has increased by approximately 13.60% per year on average, a rate that outperforms approximately 73.3% 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, Tractor Supply Co's earnings increased by approximately 13.70% per year on average, a rate that outperforms approximately 54.32% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.00%, which outperforms approximately 76.03% of global competitors, indicates strong operational efficiency and profitability potential.
Next Steps
Considering Tractor Supply Co's consistent dividend payments, robust dividend growth rate, prudent payout ratio, and solid profitability and growth metrics, the company stands out as a potentially attractive option for value investors focused on income generation. With these financial indicators, Tractor Supply Co appears to be on a sustainable path, making it worthy of consideration for those seeking a balance of growth and income in their investment portfolios. Will Tractor Supply Co maintain its impressive dividend trajectory? Only time will tell, but the current signs are promising for dividend-seeking investors.
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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.
