Assessing the Future of Sonic Healthcare Ltd's Dividend Sustainability
Sonic Healthcare Ltd (SKHHY, Financial) recently announced a dividend of $0.28 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-01. 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 Sonic Healthcare Ltd's dividend performance and assess its sustainability.
What Does Sonic Healthcare Ltd Do?
Sonic Healthcare is a global pathology provider. It is the largest private operator in Australia, Germany, Switzerland, and the U.K., the second largest in Belgium and New Zealand, and the third largest in the U.S. In addition to pathology, which contributes roughly 85% of group revenue, Sonic is the second-largest player in diagnostic imaging in Australia and the largest operator of medical centers in Australia. The company typically earns about 40% of group revenue in Australia and New Zealand, 25% in the U.S., and 35% in Europe.
A Glimpse at Sonic Healthcare Ltd's Dividend History
Sonic Healthcare Ltd has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Sonic Healthcare Ltd's Dividend Yield and Growth
As of today, Sonic Healthcare Ltd currently has a 12-month trailing dividend yield of 3.47% and a 12-month forward dividend yield of 3.48%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Sonic Healthcare Ltd's annual dividend growth rate was 6.30%. Extended to a five-year horizon, this rate decreased to 5.30% per year. And over the past decade, Sonic Healthcare Ltd's annual dividends per share growth rate stands at 5.00%.
Based on Sonic Healthcare Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Sonic Healthcare Ltd stock as of today is approximately 4.49%.
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, Sonic Healthcare Ltd's dividend payout ratio is 0.97, which may suggest that the company's dividend may not be sustainable.
Sonic Healthcare Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sonic Healthcare Ltd's profitability 9 out of 10 as of 2023-12-31, 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. Sonic Healthcare Ltd's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Sonic Healthcare Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sonic Healthcare Ltd's revenue has increased by approximately 6.60% per year on average, a rate that underperforms approximately 57.87% 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, Sonic Healthcare Ltd's earnings increased by approximately 9.40% per year on average, a rate that underperforms approximately 44.77% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.10%, which underperforms approximately 41.46% of global competitors.
Concluding Thoughts on Sonic Healthcare Ltd's Dividend Outlook
Considering Sonic Healthcare Ltd's dividend payments, growth rate, payout ratio, and profitability alongside its growth metrics, investors can form a comprehensive view of the company's dividend sustainability. While the payout ratio may raise concerns, the company's strong profitability and growth rankings provide a counterbalance, suggesting that Sonic Healthcare Ltd's dividends could be sustainable with the right strategic moves. However, it is crucial for investors to continue monitoring these metrics to ensure that their investment decisions align with their financial goals and risk appetite.
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.
