Analyzing Sasol Ltd's Dividend Performance: A Deep Dive into Sustainability and Growth
Unraveling Sasol Ltd's dividend history, yield, and growth rates for informed investment decisions
Sasol Ltd (NYSE:SSL) recently announced a dividend of $0.53 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-14. 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 deep dive into Sasol Ltd's dividend performance and assess its sustainability.
Understanding Sasol Ltd's Business Model
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Sasol Ltd operates as a vertically integrated chemicals and energy company through its two main segments: Energy business and Chemical business. It generates maximum revenue from the Chemicals segment. The company operates coal mines and its upstream interests in oil and gas, both of which are used as feedstock in the company's energy and chemicals operations. Sasol markets commodity and performance chemicals, sells liquid fuel products, and markets, distributes and transports pipeline gas. Geographically the company generates the majority of its revenue from South Africa.
Tracing Sasol Ltd's Dividend History
Sasol Ltd has maintained a consistent dividend payment record since 2022. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dissecting Sasol Ltd's Dividend Yield and Growth
As of today, Sasol Ltd currently has a 12-month trailing dividend yield of 3.05% and a 12-month forward dividend yield of 7.30%. This suggests an expectation of increased dividend payments over the next 12 months. Based on Sasol Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Sasol Ltd stock as of today is approximately 3.05%.
Assessing Dividend Sustainability: 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 2023-06-30, Sasol Ltd's dividend payout ratio is 1.71, suggesting that the company's dividend may not be sustainable.
Sasol Ltd's profitability rank offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sasol Ltd's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Projecting Future Growth
To ensure the sustainability of dividends, a company must have robust growth metrics. Sasol Ltd'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 Sasol Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sasol Ltd's revenue has increased by approximately 12.70% per year on average, a rate that outperforms approximately 60.5% of global competitors.
Conclusion
While Sasol Ltd's consistent dividend payment history and promising yield rates might be attractive, investors must also consider the company's high payout ratio and the sustainability of its dividends. The company's robust growth metrics and profitability rank, however, paint a positive picture of its future prospects. Therefore, investors should closely monitor these aspects while making investment decisions.
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This article first appeared on GuruFocus.
