An In-depth Look at Persimmon PLC's Dividend Performance and Sustainability
Persimmon PLC (PSMMY, Financial) recently announced a dividend of $0.5 per share, payable on 2023-11-20, with the ex-dividend date set for 2023-10-12. 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 Persimmon PLC's dividend performance and assess its sustainability.
What Does Persimmon PLC Do?
Persimmon is the U.K.'s second-largest residential property developer by revenue and dwelling completions, marketing homes under its three brands: Persimmon Homes, Charles Church, and Westbury Partnerships. Persimmon largely caters to the lower-priced segment of the newbuild market, attracting more first-time homebuyers than any of its peer homebuilders. Aligning with the typical business model employed by U.K. homebuilders, Persimmon is a vertically integrated speculative homebuilder.
A Glimpse at Persimmon PLC's Dividend History
Persimmon PLC has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Persimmon PLC's Dividend Yield and Growth
As of today, Persimmon PLC currently has a 12-month trailing dividend yield of 5.75% and a 12-month forward dividend yield of 7.66%. This suggests an expectation of increased dividend payments over the next 12 months. Extended to a five-year horizon, this rate increased to 5.90% per year.
Based on Persimmon PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Persimmon PLC stock as of today is approximately 7.66%.
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 2023-06-30, Persimmon PLC's dividend payout ratio is 0.59.
Persimmon PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Persimmon PLC's profitability 8 out of 10 as of 2023-06-30, 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. Persimmon PLC'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 Persimmon PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Persimmon PLC's revenue has increased by approximately 1.20% per year on average, a rate that underperforms than approximately 69.31% 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, Persimmon PLC's earnings increased by approximately -13.20% per year on average, a rate that underperforms than approximately 78.41% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -6.50%, which underperforms than approximately 79.71% of global competitors.
Next Steps
Based on Persimmon PLC's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, it's clear that the company has a strong track record of maintaining a consistent dividend. However, its underperformance in earnings and revenue growth compared to global competitors may be a concern for investors looking for long-term dividend sustainability. Therefore, investors should carefully consider these factors when making their investment decisions.
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.
