Assessing the Sustainability of LH's Dividend Payments
Laboratory Corp of America Holdings (LH, Financial) recently announced a dividend of $0.72 per share, payable on 2024-03-13, with the ex-dividend date set for 2024-02-26. 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 Laboratory Corp of America Holdings's dividend performance and assess its sustainability.
What Does Laboratory Corp of America Holdings Do?
Laboratory Corp of America is one of the nation's two largest independent clinical laboratories, with roughly 20% of the independent lab market. The company operates approximately 2,000 patient-service centers, offering a broad range of 5,000 clinical lab tests, ranging from routine blood and urine screens to complex oncology and genomic testing.
A Glimpse at Laboratory Corp of America Holdings's Dividend History
Laboratory Corp of America Holdings has maintained a consistent dividend payment record since 2022. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Laboratory Corp of America Holdings's Dividend Yield and Growth
As of today, Laboratory Corp of America Holdings currently has a 12-month trailing dividend yield of 1.31% and a 12-month forward dividend yield of 1.31%. This suggests an expectation of same dividend payments over the next 12 months.
Based on Laboratory Corp of America Holdings's dividend yield and five-year growth rate, the 5-year yield on cost of Laboratory Corp of America Holdings stock as of today is approximately 1.31%.
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 2023-12-31, Laboratory Corp of America Holdings's dividend payout ratio is 0.23.
Laboratory Corp of America Holdings's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Laboratory Corp of America Holdings's profitability 8 out of 10 as of 2023-12-31, 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. Laboratory Corp of America Holdings'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 Laboratory Corp of America Holdings's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Laboratory Corp of America Holdings's revenue has increased by approximately -0.90% per year on average, a rate that underperforms than approximately 74.11% 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, Laboratory Corp of America Holdings's earnings increased by approximately -11.30% per year on average, a rate that underperforms than approximately 74.27% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 13.30%, which underperforms than approximately 47.54% of global competitors.
Next Steps
In conclusion, Laboratory Corp of America Holdings's commitment to consistent dividend payments, backed by a low payout ratio and strong profitability rank, suggests a stable dividend outlook. However, investors should remain cautious of the company's underperforming revenue and earnings growth rates in comparison to global competitors. These growth metrics warrant close monitoring to ensure the long-term sustainability of dividends. As value investors consider the prospects of Laboratory Corp of America Holdings, they should also take into account the company's ability to adapt to industry trends and maintain its competitive position in the market.
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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.
