A Comprehensive Examination of Wells Fargo & Co's Dividend Performance and Sustainability
Wells Fargo & Co (WFC, Financial) recently announced a dividend of $0.35 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-11-02. As investors anticipate this upcoming payment, attention is also drawn to the company's dividend history, yield, and growth rates. Using the data from GuruFocus, we will delve into Wells Fargo & Co's dividend performance and evaluate its sustainability.
Understanding Wells Fargo & Co's Business
Wells Fargo is one of the largest banks in the United States, with approximately $1.9 trillion in balance sheet assets. The company is divided into four primary segments: consumer banking, commercial banking, corporate and investment banking, and wealth and investment management. It is primarily focused on the U.S. market.
Wells Fargo & Co's Dividend History
Wells Fargo & Co has maintained a consistent dividend payment record since 1986, with dividends currently distributed on a quarterly basis. The chart below shows the annual Dividends Per Share for tracking historical trends.
Wells Fargo & Co's Dividend Yield and Growth
As of today, Wells Fargo & Co has a 12-month trailing dividend yield of 3.15% and a 12-month forward dividend yield of 3.55%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Wells Fargo & Co's annual dividend growth rate was -16.90%. This rate increased to -13.70% per year over a five-year horizon, and for the past decade, Wells Fargo & Co's annual dividends per share growth rate stands at -0.50%.
Based on Wells Fargo & Co's dividend yield and five-year growth rate, the 5-year yield on cost of Wells Fargo & Co stock as of today is approximately 1.51%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
In assessing the sustainability of the dividend, it is important 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 2023-09-30, Wells Fargo & Co's dividend payout ratio is 0.27.
Wells Fargo & Co's profitability rank is 6 out of 10 as of 2023-09-30, suggesting fair profitability. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Future Outlook: Growth Metrics
For dividends to be sustainable, a company must demonstrate robust growth metrics. Wells Fargo & Co's growth rank of 6 out of 10 suggests a fair growth outlook.
Revenue is crucial to any company, and Wells Fargo & Co's revenue per share, along with the 3-year revenue growth rate, indicates a strong revenue model. The company's revenue has increased by approximately -0.70% per year on average, a rate that underperforms approximately 83.44% of global competitors.
The company's 3-year EPS growth rate showcases its ability to grow earnings, a critical component for sustaining dividends in the long run. During the past three years, Wells Fargo & Co's earnings increased by approximately -8.40% per year on average, a rate that underperforms approximately 89.31% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -8.60% underperforms approximately 91.85% of global competitors.
Conclusion
Despite a challenging environment, Wells Fargo & Co has managed to maintain a consistent dividend payment record. Its current dividend yield and payout ratio indicate a healthy dividend policy. However, the company's negative growth rates over the past few years raise questions about the sustainability of future dividend increases. Investors should closely monitor the company's growth metrics and profitability to assess the future prospects of its dividends.
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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.
