Understanding LNSTY's Dividend Sustainability and Growth
London Stock Exchange Group PLC (LNSTY, Financial) recently announced a dividend of $0.25 per share, payable on 2024-06-06, with the ex-dividend date set for 2024-04-18. 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 London Stock Exchange Group PLC's dividend performance and assess its sustainability.
What Does London Stock Exchange Group PLC Do?
London Stock Exchange Group is a fully integrated financial exchange company covering the financial market value chain from primary and secondary markets across multiple asset classes over data, index and analytics down to clearing and post-trading reporting. With the acquisition of Refinitiv, LSEG generates about two-thirds of its revenue from data and analytics including its FTSE Russell and WM/Refinitiv benchmarks as well as data feeds and terminals. The group is also a majority shareholder in Tradeweb, one of the dominant global fixed income trading venues, as well as LCH, the largest clearing house for over-the-counter swaps globally.
A Glimpse at London Stock Exchange Group PLC's Dividend History
London Stock Exchange Group PLC has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down London Stock Exchange Group PLC's Dividend Yield and Growth
As of today, London Stock Exchange Group PLC currently has a 12-month trailing dividend yield of 1.15% and a 12-month forward dividend yield of 1.24%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, London Stock Exchange Group PLC's annual dividend growth rate was 14.90%. Extended to a five-year horizon, this rate increased to 15.50% per year. And over the past decade, London Stock Exchange Group PLC's annual dividends per share growth rate stands at an impressive 17.40%.
Based on London Stock Exchange Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of London Stock Exchange Group PLC stock as of today is approximately 2.36%.
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, London Stock Exchange Group PLC's dividend payout ratio is 0.34.
London Stock Exchange Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks London Stock Exchange Group PLC's profitability 9 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. London Stock Exchange Group PLC'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 London Stock Exchange Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. London Stock Exchange Group PLC's revenue has increased by approximately 38.40% per year on average, a rate that outperforms approximately 84.4% 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, London Stock Exchange Group PLC's earnings increased by approximately 15.80% per year on average, a rate that outperforms approximately 61.13% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.20%, which outperforms approximately 60.16% of global competitors.
Investor Considerations and Next Steps
Considering London Stock Exchange Group PLC's robust dividend growth rate, moderate payout ratio, strong profitability, and impressive growth metrics, the company presents an attractive profile for value investors interested in sustainable dividend income. While past performance is indicative, investors should also consider future prospects, including industry trends and the company's strategic initiatives, when evaluating the potential for ongoing dividend growth and stability. As always, investors are encouraged to conduct their due diligence and consider their investment goals and risk tolerance before making any financial decisions.
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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.
