Assessing the Sustainability of Saputo Inc's Upcoming Dividend
Saputo Inc (SAPIF, Financial) recently announced a dividend of $0.19 per share, payable on 2024-03-15, with the ex-dividend date set for 2024-03-04. 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 Saputo Inc's dividend performance and assess its sustainability.
What Does Saputo Inc Do?
Saputo Inc is a global dairy processor domiciled in Canada (26% of fiscal 2023 sales) with operations in the United States (47%), the UK (6%), and other international markets (21%). It sells cheese, cream, fluid milk, and other dairy products. In the retail segment (48% of revenue), its mix of brands includes Saputo, Armstrong, Cheer, Cathedral City, and Frylight. Saputo Inc also competes in foodservice (33% of revenue) and industrials (19% of revenue), which houses its ingredients business.
A Glimpse at Saputo Inc's Dividend History
Saputo Inc has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis.
Saputo Inc has increased its dividend each year since 2004. 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 20 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Saputo Inc's Dividend Yield and Growth
As of today, Saputo Inc currently has a 12-month trailing dividend yield of 2.66% and a 12-month forward dividend yield of 2.70%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Saputo Inc's annual dividend growth rate was 2.20%. Extended to a five-year horizon, this rate increased to 2.80% per year. And over the past decade, Saputo Inc's annual dividends per share growth rate stands at 5.80%.
Based on Saputo Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Saputo Inc stock as of today is approximately 3.05%.
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, Saputo Inc's dividend payout ratio is 0.66.
Saputo Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Saputo Inc's profitability 7 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. Saputo Inc'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 Saputo Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Saputo Inc's revenue has increased by approximately 4.70% per year on average, a rate that underperforms approximately 57.1% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -3.10%, which underperforms approximately 69.98% of global competitors.
Next Steps
In conclusion, Saputo Inc's consistent dividend history and its status as a dividend achiever underscore the company's commitment to shareholder returns. While the dividend growth rate and payout ratio present a positive picture, the mixed growth metrics suggest that investors should monitor revenue and EBITDA trends closely. The solid profitability rank and positive net income trend offer reassurance regarding the company's financial health. As Saputo Inc navigates the dynamic dairy industry, value investors should consider these factors in their investment decisions. Will Saputo Inc continue its dividend growth trajectory in the face of these challenges?
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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.
