Assessing the Sustainability and Growth of Ingredion Inc's Dividends
Ingredion Inc (INGR, Financial) recently announced a dividend of $0.78 per share, payable on 2024-01-23, with the ex-dividend date set for 2023-12-29. 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 Ingredion Inc's dividend performance and assess its sustainability.
What Does Ingredion Inc Do?
Ingredion is an ingredients provider for the food, beverage, brewing, and animal nutrition industries. The company processes corn, tapioca, potatoes, stevia, grains, fruits, gums, and vegetables into value-added ingredients. The company has two main product lines: specialty and core ingredients. Specialty ingredients includes starch-based texturizers, natural alternative sweeteners such as stevia, and plant proteins for alternative dairy and snacks. Core ingredients includes sweeteners, such as high-fructose corn syrup, and commodity starches, such as those used for sustainable packaging.
A Glimpse at Ingredion Inc's Dividend History
Ingredion Inc has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a quarterly basis. Ingredion Inc has increased its dividend each year since 1998. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 25 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ingredion Inc's Dividend Yield and Growth
As of today, Ingredion Inc currently has a 12-month trailing dividend yield of 2.71% and a 12-month forward dividend yield of 2.90%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Ingredion Inc's annual dividend growth rate was 2.70%. Extended to a five-year horizon, this rate increased to 3.60% per year. And over the past decade, Ingredion Inc's annual dividends per share growth rate stands at 9.20%.
Based on Ingredion Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ingredion Inc stock as of today is approximately 3.23%.
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 2023-09-30, Ingredion Inc's dividend payout ratio is 0.31.
Ingredion Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ingredion Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of 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. Ingredion 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 Ingredion Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ingredion Inc's revenue has increased by approximately 8.80% per year on average, a rate that outperforms approximately 57.41% 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, Ingredion Inc's earnings increased by approximately 3.10% per year on average, a rate that outperforms approximately 44.16% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.70%, which outperforms approximately 32.92% of global competitors.
Next Steps
Considering Ingredion Inc's consistent dividend payments, an increasing dividend growth rate, a prudent payout ratio, strong profitability, and solid growth metrics, the company presents a compelling case for value investors focused on income-generating stocks. While past performance is indicative, it is not a guarantee of future results, and investors should always perform their due diligence. For those seeking to expand their portfolio with dividend-bearing stocks, Ingredion Inc warrants a closer look. Will Ingredion Inc continue to be a sustainable dividend payer in the years to come? That remains a question for investors to ponder as they consider the company's strategic position in a dynamic market.
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.
