Air Products & Chemicals Inc's Dividend Analysis
Assessing the Sustainability and Growth of APD's Dividends
Air Products & Chemicals Inc (NYSE:APD) recently announced a dividend of $1.77 per share, payable on 2024-05-13, with the ex-dividend date set for 2024-03-28. 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 Air Products & Chemicals Inc's dividend performance and assess its sustainability.
What Does Air Products & Chemicals Inc Do?
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Since its founding in 1940, Air Products has become one of the leading industrial gas suppliers globally, with operations in 50 countries and 19,000 employees. The company is the largest supplier of hydrogen and helium in the world. It has a unique portfolio serving customers in a number of industries, including chemicals, energy, healthcare, metals, and electronics. Air Products generated $12.6 billion in revenue in fiscal 2023.
A Glimpse at Air Products & Chemicals Inc's Dividend History
Air Products & Chemicals Inc has maintained a consistent dividend payment record since 1983. Dividends are currently distributed on a quarterly basis.
Air Products & Chemicals Inc has increased its dividend each year since 1983. 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 41 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Air Products & Chemicals Inc's Dividend Yield and Growth
As of today, Air Products & Chemicals Inc currently has a 12-month trailing dividend yield of 2.96% and a 12-month forward dividend yield of 2.97%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Air Products & Chemicals Inc's annual dividend growth rate was 9.90%. Extended to a five-year horizon, this rate increased to 10.50% per year. And over the past decade, Air Products & Chemicals Inc's annual dividends per share growth rate stands at 9.90%.
Based on Air Products & Chemicals Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Air Products & Chemicals Inc stock as of today is approximately 4.88%.
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, Air Products & Chemicals Inc's dividend payout ratio is 0.60.
Air Products & Chemicals Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Air Products & Chemicals Inc's profitability 8 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. Air Products & Chemicals 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 Air Products & Chemicals Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Air Products & Chemicals Inc's revenue has increased by approximately 12.40% per year on average, a rate that outperforms approximately 60.99% 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, Air Products & Chemicals Inc's earnings increased by approximately 11.20% per year on average, a rate that outperforms approximately 52.26% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 35.30%, which outperforms approximately 86.45% of global competitors, underscores its efficiency in generating earnings before interest, taxes, depreciation, and amortization.
Next Steps
With Air Products & Chemicals Inc's consistent dividend growth, a prudent payout ratio, and strong profitability and growth metrics, the company's dividends appear sustainable. For value investors, APD presents a compelling case for those seeking steady income and potential for capital appreciation. Reflecting on these factors, investors might consider whether APD fits into their long-term investment strategy, especially in the context of a diversified income-generating portfolio.
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.
