Assessing the Sustainability and Growth of CODI's Dividend
Compass Diversified Holdings (CODI, Financial) recently announced a dividend of $0.25 per share, payable on 2023-10-26, with the ex-dividend date set for 2023-10-18. As investors anticipate this impending payment, it's crucial to analyze the company's dividend history, yield, and growth rates. This article, leveraging data from GuruFocus, delves into Compass Diversified Holdings's dividend performance and evaluates its sustainability.
Understanding Compass Diversified Holdings
Compass Diversified Holdings is a U.S.-based diversified business conglomerate with two primary segments: branded consumer business and niche industrial business. The branded consumer businesses, which include 5.11, Ergobaby, Liberty Safe, and Velocity Outdoor, leverage a strong brand name in their respective market sectors. The niche industrial businesses, such as Advanced Circuits, Arnold, Foam Fabricators, and Sterno, focus on manufacturing and selling specific products and industrial services within a distinct market sector. The company operates in the United States, Canada, Europe, Asia Pacific, and other international regions.
Compass Diversified Holdings's Dividend History
Compass Diversified Holdings has a consistent dividend payment record dating back to 2006, with dividends currently distributed quarterly. The following chart displays annual Dividends Per Share for tracking historical trends.
Compass Diversified Holdings's Dividend Yield and Growth
As of today, Compass Diversified Holdings has a 12-month trailing dividend yield and a 12-month forward dividend yield of 5.43%, suggesting an expectation of similar dividend payments over the next 12 months.
Over the past three years, Compass Diversified Holdings's annual dividend growth rate was -11.40%. When extended to a five-year horizon, this rate increased to -5.10% per year. Over the past decade, Compass Diversified Holdings's annual dividends per share growth rate stands at -1.60%.
Based on Compass Diversified Holdings's dividend yield and five-year growth rate, the 5-year yield on cost of Compass Diversified Holdings stock as of today is approximately 4.18%.
Assessing Dividend Sustainability: 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, Compass Diversified Holdings's dividend payout ratio is 0.00.
Compass Diversified Holdings's profitability rank, at 7 out of 10 as of 2023-06-30, suggests good profitability prospects. The company has reported net profit in 9 out of the past 10 years.
Examining Growth Metrics for Future Outlook
For a company to sustain dividends, it must have robust growth metrics. Compass Diversified Holdings's growth rank of 7 out of 10 suggests a good growth trajectory relative to its competitors.
Revenue is the lifeblood of any company, and Compass Diversified Holdings's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Compass Diversified Holdings's revenue has increased by approximately 14.90% per year on average, a rate that outperforms approximately 73.55% 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, Compass Diversified Holdings's earnings increased by approximately 55.10% per year on average, a rate that outperforms approximately 81.04% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 22.30% outperforms approximately 75% of global competitors.
Conclusion
In conclusion, while Compass Diversified Holdings's dividend payments have seen some fluctuations over the years, the company's strong profitability, robust growth metrics, and low payout ratio point towards the potential for sustainable dividends in the future. However, the negative dividend growth rate over the past three, five, and ten years is a concern that investors should monitor closely. It's crucial to keep an eye on these factors and make informed decisions accordingly.
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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.
