Volvo AB's Dividend Analysis

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Insights into Volvo AB's Dividend Sustainability and Growth

Volvo AB (VLVLY, Financial) recently announced a dividend of $0.72 per share, payable on 2024-04-19, with the ex-dividend date set for 2024-04-01. 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 Volvo AB's dividend performance and assess its sustainability.

What Does Volvo AB Do?

Volvo AB drives prosperity through transport and infrastructure solutions, offering trucks, buses, construction equipment, power solutions for marine and industrial applications, financing, and services that increase the customers' uptime and productivity. Its segments are Trucks, Construction Equipment, Buses, Volvo Penta, and Group Functions & Other.

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A Glimpse at Volvo AB's Dividend History

Volvo AB has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

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Breaking Down Volvo AB's Dividend Yield and Growth

As of today, Volvo AB currently has a 12-month trailing dividend yield of 2.32% and a 12-month forward dividend yield of 2.46%. This suggests an expectation of increased dividend payments over the next 12 months.

Based on Volvo AB's dividend yield and five-year growth rate, the 5-year yield on cost of Volvo AB stock as of today is approximately 2.32%.

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, Volvo AB's dividend payout ratio is 0.29.

Volvo AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Volvo AB's profitability 8 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. Volvo AB's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.

Revenue is the lifeblood of any company, and Volvo AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Volvo AB's revenue has increased by approximately 17.80% per year on average, a rate that outperforms approximately 76.88% 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, Volvo AB's earnings increased by approximately 38.00% per year on average, a rate that outperforms approximately 71.97% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 13.10%, which outperforms approximately 63.48% of global competitors.

Concluding Thoughts on Volvo AB's Dividend Outlook

In conclusion, Volvo AB's upcoming dividend payment, consistent dividend history, and favorable yield metrics are attractive to investors seeking steady income streams. The company's low payout ratio paired with a strong profitability rank indicates a sustainable dividend policy. Moreover, Volvo AB's positive growth metrics suggest a promising future that could support ongoing dividend increases. For investors eyeing long-term stability and growth, Volvo AB presents a compelling case. Will Volvo AB continue to drive shareholder value and outperform industry trends with its robust financial health?

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.

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.