Assessing the Dividend Sustainability of Smith & Wesson Brands Inc
Smith & Wesson Brands Inc (SWBI, Financial) recently announced a dividend of $0.12 per share, payable on 2023-10-05, with the ex-dividend date set for 2023-09-20. 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 deep dive into Smith & Wesson Brands Inc's dividend performance and assess its sustainability.
What Does Smith & Wesson Brands Inc Do?
Smith & Wesson Brands Inc is a U.S.-based leader in firearm manufacturing. It operates under one reportable segment: Firearms, which includes firearms distribution and manufacturing services. The company manufactures handguns, long guns, sporting rifles, shooting gear, and suppressor products. The firm's brand portfolio consists of Smith and Wesson, M&P, Thompson/Center Arms, Performance Center, and Gemtech; which are used for defense, law enforcement, hunting, and sporting purposes. The company operates internationally, with the majority of income generated by the U.S. market from its handgun products.
A Glimpse at Smith & Wesson Brands Inc's Dividend History
Smith & Wesson Brands Inc has maintained a consistent dividend payment record since 2020. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Smith & Wesson Brands Inc's Dividend Yield and Growth
As of today, Smith & Wesson Brands Inc currently has a 12-month trailing dividend yield of 3.56% and a 12-month forward dividend yield of 4.10%. This suggests an expectation of increased dividend payments over the next 12 months.
Based on Smith & Wesson Brands Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Smith & Wesson Brands Inc stock as of today is approximately 3.56%.
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 2023-07-31, Smith & Wesson Brands Inc's dividend payout ratio is 0.53.
Smith & Wesson Brands Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Smith & Wesson Brands Inc's profitability 8 out of 10 as of 2023-07-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Smith & Wesson Brands Inc'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 Smith & Wesson Brands Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Smith & Wesson Brands Inc's revenue has increased by approximately 2.90% per year on average, a rate that outperforms approximately 52.47% 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, Smith & Wesson Brands Inc's earnings increased by approximately 17.00% per year on average, a rate that outperforms approximately 63.77% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 43.50% outperforms approximately 90.91% of global competitors.
Next Steps
Considering Smith & Wesson Brands Inc's consistent dividend payments, impressive growth rate, moderate payout ratio, and strong profitability, the company presents a compelling case for dividend investors. However, as with any investment, it is crucial to conduct thorough research and consider the company's overall financial health before making a decision. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
