Allison Transmission Holdings Inc's Dividend Analysis
Assessing the Dividend Profile of Allison Transmission Holdings Inc
Allison Transmission Holdings Inc (NYSE:ALSN) recently announced a dividend of $0.25 per share, payable on 2024-03-15, 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 Allison Transmission Holdings Inc's dividend performance and assess its sustainability.
What Does Allison Transmission Holdings Inc Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Allison Transmission is the largest manufacturer of fully automatic transmissions for commercial vehicles. The company's automatic transmissions allow customers to achieve better fuel and operator efficiency than less expensive manual and automated manual transmissions. Allison serves several end markets, including on- and off-highway equipment and military vehicles. Its on-highway business has approximately 60% global market share. The company's transmissions can be found in Class 4 through Class 8 trucks, buses, and a limited number of large passenger vehicles (heavy-duty pickup trucks and motor homes). Allison also produces electric hybrid propulsion systems and is developing e-powertrains.
A Glimpse at Allison Transmission Holdings Inc's Dividend History
Allison Transmission Holdings Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. Allison Transmission Holdings Inc has increased its dividend each year since 2012. 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 12 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Allison Transmission Holdings Inc's Dividend Yield and Growth
As of today, Allison Transmission Holdings Inc currently has a 12-month trailing dividend yield of 1.22% and a 12-month forward dividend yield of 1.32%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Allison Transmission Holdings Inc's annual dividend growth rate was 10.60%. Extended to a five-year horizon, this rate decreased to 9.80% per year. And over the past decade, Allison Transmission Holdings Inc's annual dividends per share growth rate stands at 6.50%.
Based on Allison Transmission Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Allison Transmission Holdings Inc stock as of today is approximately 1.95%.
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, Allison Transmission Holdings Inc's dividend payout ratio is 0.12.
Allison Transmission Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Allison Transmission Holdings Inc's profitability 10 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. Allison Transmission Holdings Inc's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Allison Transmission Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Allison Transmission Holdings Inc's revenue has increased by approximately 22.30% per year on average, a rate that outperforms approximately 86.65% 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, Allison Transmission Holdings Inc's earnings increased by approximately 41.40% per year on average, a rate that outperforms approximately 80.4% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 9.30%, which outperforms approximately 62.97% of global competitors.
Conclusion: The Dividend Outlook for Allison Transmission Holdings Inc
In conclusion, Allison Transmission Holdings Inc presents a promising dividend profile with a history of consistent dividend growth, a reasonable payout ratio, and strong profitability. The company's robust growth metrics further support the potential for ongoing dividend sustainability and growth. As value investors consider the future prospects of Allison Transmission Holdings Inc, they can rely on its solid financial foundation and market position to inform their investment decisions. Will Allison Transmission Holdings Inc continue to be a reliable source of dividends for years to come? The data certainly seems to suggest so.
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.
