Advance Auto Parts Inc's Dividend Analysis
An In-Depth Look at Advance Auto Parts Inc's Upcoming Dividend and Historical Performance
Advance Auto Parts Inc (NYSE:AAP) recently announced a dividend of $0.25 per share, payable on 2024-01-26, with the ex-dividend date set for 2024-01-11. 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 Advance Auto Parts Inc's dividend performance and assess its sustainability.
What Does Advance Auto Parts Inc Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Advance Auto Parts is one of the industry's largest retailers of aftermarket automotive parts, tools, and accessories to do-it-yourself customers and third-party vehicle repair facilities in North America. Advance operated 5,086 stores as of the end of 2022, in addition to servicing 1,311 independently owned Carquest stores. The company's Worldpac chain is a premier distributor of imported original-equipment parts. Advance derived 59% of its 2022 sales from commercial clients, with the remainder from DIY shoppers.
A Glimpse at Advance Auto Parts Inc's Dividend History
Advance Auto Parts Inc has maintained a consistent dividend payment record since 2006. Dividends are currently distributed on a quarterly basis.
Advance Auto Parts Inc has increased its dividend each year since 2006. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 18 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Advance Auto Parts Inc's Dividend Yield and Growth
As of today, Advance Auto Parts Inc currently has a 12-month trailing dividend yield of 5.75% and a 12-month forward dividend yield of 1.62%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Advance Auto Parts Inc's annual dividend growth rate was 192.40%. Extended to a five-year horizon, this rate decreased to 106.30% per year. And over the past decade, Advance Auto Parts Inc's annual dividends per share growth rate stands at an impressive 32.30%.
Based on Advance Auto Parts Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Advance Auto Parts Inc stock as of today is approximately 214.86%.
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, Advance Auto Parts Inc's dividend payout ratio is 0.94, which may suggest that the company's dividend may not be sustainable.
Advance Auto Parts Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Advance Auto Parts 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. Advance Auto Parts 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 Advance Auto Parts Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Advance Auto Parts Inc's revenue has increased by approximately 10.40% per year on average, a rate that outperforms approximately 68.33% 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, Advance Auto Parts Inc's earnings increased by approximately 16.80% per year on average, a rate that outperforms approximately 58.65% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 20.00%, which outperforms approximately 73.39% of global competitors.
Next Steps
As we assess Advance Auto Parts Inc's upcoming dividend payment, it is essential to consider the company's history of consistent dividend growth, its current yield, and the sustainability of its payout ratio. Advance Auto Parts Inc's robust profitability and growth metrics further bolster the case for its dividend's sustainability. However, the current payout ratio suggests that investors should keep an eye on the company's ability to maintain its dividend levels. With the automotive industry evolving and the company's strong position within it, Advance Auto Parts Inc remains an intriguing prospect for value investors seeking dividend income.
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.
This article first appeared on GuruFocus.
