Ally Financial Inc's Dividend Analysis
Understanding the Dividend Dynamics of Ally Financial Inc
Ally Financial Inc (NYSE:ALLY) recently announced a dividend of $0.3 per share, payable on 2024-02-15, with the ex-dividend date set for 2024-01-31. 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 Ally Financial Inc's dividend performance and assess its sustainability.
What Does Ally Financial Inc Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Formerly the captive financial arm of General Motors, Ally Financial Inc became an independent publicly traded firm in 2014 and is one of the largest consumer auto lenders in the country. While the firm has expanded its product offerings over time, it remains primarily focused on auto lending with more than 70% of its loan book in consumer auto loans and dealer financing. Ally Financial Inc also offers a range of financial products including auto insurance, personal loans, commercial loans, credit cards, and holds a portfolio of mortgage debt. Its diversified business model is further enhanced by its brokerage services, positioning the company well within the financial sector.
A Glimpse at Ally Financial Inc's Dividend History
Ally Financial Inc has maintained a consistent dividend payment record since 2016, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ally Financial Inc's Dividend Yield and Growth
As of today, Ally Financial Inc currently has a 12-month trailing dividend yield of 3.21% and a 12-month forward dividend yield of 3.21%, suggesting an expectation of consistent dividend payments over the next 12 months. Over the past three years, Ally Financial Inc's annual dividend growth rate was 20.80%, which increased to 22.00% per year when extended to a five-year horizon. Based on Ally Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ally Financial Inc stock as of today is approximately 8.68%.
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. As of 2023-12-31, Ally Financial Inc's dividend payout ratio is 0.38, indicating a balanced approach to dividend payments and retained earnings for future growth. Ally Financial Inc's profitability rank is 5 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported positive net income for each of the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
Ally Financial Inc's growth rank of 5 out of 10 suggests a fair growth outlook. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with revenue increasing by approximately 16.20% per year on average. This rate outperforms approximately 72.54% of global competitors. Ally Financial Inc's 3-year EPS growth rate and 5-year EBITDA growth rate of 23.60% also outperform a significant proportion of global competitors, indicating strong potential for sustained dividend payments.
Next Steps
In conclusion, Ally Financial Inc's consistent dividend payments, robust dividend growth rate, moderate payout ratio, fair profitability, and solid growth metrics paint a positive picture for current and potential investors. The company's financial health and strategic positioning suggest a sustainable dividend policy that could appeal to value investors looking for stable income streams. As the financial sector continues to evolve, Ally Financial Inc appears well-equipped to navigate the challenges and opportunities ahead. Will Ally Financial Inc's dividends continue to be a reliable source of income for investors? Only time will tell, but the current indicators are promising. For those seeking high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research.
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.
