Assessing the Upcoming Dividend Payout and Company's Financial Health
Analog Devices Inc(NASDAQ:ADI) recently announced a dividend of $0.86 per share, payable on 2023-12-14, with the ex-dividend date set for 2023-12-01. 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 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. The company has increased its dividend each year since 2004, earning it the title of a dividend achiever, a prestigious recognition for companies with at least 19 consecutive years of dividend increases. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down Analog Devices Inc's Dividend Yield and Growth
Analog Devices Inc currently has a 12-month trailing dividend yield of 1.76% and a forward dividend yield of 1.82%, indicating an anticipated increase in dividend payments over the next year. Over the past three years, the annual dividend growth rate was 12.20%, which decreased slightly to 11.40% over a five-year period. Over the past decade, the annual dividends per share growth rate stands at 9.30%. Based on these figures, the 5-year yield on cost for Analog Devices Inc stock is approximately 3.02%.
The Sustainability Question: Payout Ratio and Profitability
The sustainability of dividends is often gauged by examining the payout ratio. Analog Devices Inc's dividend payout ratio is currently 0.51, meaning that the company distributes just over half of its earnings as dividends, retaining the rest for growth and as a buffer against downturns. The company's profitability rank is 9 out of 10, indicating strong earnings relative to peers. This is underscored by a decade of positive net income, reinforcing the company's financial stability and its ability to sustain dividend payments.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must demonstrate robust growth metrics. Analog Devices Inc's growth rank is 9 out of 10, reflecting a strong growth trajectory compared to competitors. The company's revenue per share and 3-year revenue growth rate of 12.60% per year outperform approximately 51.26% of global competitors. Additionally, the 3-year EPS growth rate of 13.70% per year and the 5-year EBITDA growth rate of 12.40% surpass the performance of many competitors, indicating a healthy financial future that is supportive of ongoing dividend payouts.
Considering Analog Devices Inc's consistent dividend increases, a moderate payout ratio, and robust profitability and growth metrics, the company stands out as a potentially strong candidate for value investors focused on dividend income. As the company continues to innovate and expand within the semiconductor industry, its financial health suggests that the dividend payments are not only sustainable but also poised for future growth. Will Analog Devices Inc continue to reward its shareholders with increasing dividends, and how will this reflect in the company's overall investment appeal? For more insights and tools to find high-dividend yield stocks, GuruFocus Premium members can utilize 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.