Analog Devices Inc's Dividend Analysis
Assessing the Sustainability and Growth of ADI's Dividends
Analog Devices Inc (NASDAQ:ADI) recently announced a dividend of $0.92 per share, payable on 2024-03-15, with the ex-dividend date set for 2024-03-04. 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 Analog Devices Inc's dividend performance and assess its sustainability.
What Does Analog Devices Inc Do?
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Analog Devices is a leading analog, mixed signal, and digital signal processing chipmaker. The firm has a significant market share lead in converter chips, which are used to translate analog signals to digital and vice versa. The company serves tens of thousands of customers, and more than half of its chip sales are made to industrial and automotive end markets. Analog Devices' chips are also incorporated into wireless infrastructure equipment.
A Glimpse at Analog Devices Inc's Dividend History
Analog Devices Inc has maintained a consistent dividend payment record since 2003, with dividends currently distributed on a quarterly basis. Moreover, Analog Devices Inc has increased its dividend each year since 2004, earning it the status of a dividend achiever. This accolade is reserved for companies that have increased their dividend each year for at least the past 20 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Analog Devices Inc's Dividend Yield and Growth
As of today, Analog Devices Inc currently has a 12-month trailing dividend yield of 1.75% and a 12-month forward dividend yield of 1.88%. This indicates an expectation of increased dividend payments over the next 12 months. Over the past three years, Analog Devices Inc's annual dividend growth rate was 11.60%, which extends to a five-year horizon, increasing to 12.10% per year. Over the past decade, the annual dividends per share growth rate stands at 9.60%.
Based on Analog Devices Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Analog Devices Inc stock as of today is approximately 3.10%.
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 2024-01-31, Analog Devices Inc's dividend payout ratio is 0.46.
Analog Devices Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Analog Devices Inc's profitability 9 out of 10 as of 2024-01-31, 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. Analog Devices Inc'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 Analog Devices Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Analog Devices Inc's revenue has increased by approximately 17.30% per year on average, a rate that outperforms approximately 64.55% 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, Analog Devices Inc's earnings increased by approximately 26.10% per year on average, a rate that outperforms approximately 54.97% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.50%, which outperforms approximately 40.65% of global competitors, further reinforces the company's growth potential.
Concluding Insights on ADI's Dividend Profile
Combining Analog Devices Inc's consistent dividend increases, a moderate payout ratio, and robust profitability and growth metrics paints a picture of a company with a solid dividend profile. For value investors seeking stable and growing income streams, ADI presents an attractive case. However, as with any investment, it is crucial to monitor the underlying business performance and market conditions that could impact future dividend sustainability.
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.
