Aramark's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance of Aramark (NYSE:ARMK)
Aramark (NYSE:ARMK) recently announced a dividend of $0.1 per share, payable on 2024-02-28, with the ex-dividend date set for 2024-02-13. 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 Aramark's dividend performance and assess its sustainability.
What Does Aramark Do?
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Aramark provides food, facilities, and uniform services to a variety of clients and institutions. The majority of company revenue comes from its North American food and support services segment. Smaller but substantial segments include food and support services international, food and support services united states and uniform and career apparel. The food and support services segments provide food for school districts; colleges; healthcare facilities; correctional institutions; and business, sports, and entertainment venues. The uniform segment rents, delivers, cleans, and maintains work clothes and ancillary items like towels and mats to customers in North America and Japan. The company has hundreds of service locations and distribution centers across the United States and Canada.
A Glimpse at Aramark's Dividend History
Aramark has maintained a consistent dividend payment record since 2014, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2014, earning it the status of a dividend achiever, a title reserved for companies that have consistently increased their dividends for at least the past 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Aramark's Dividend Yield and Growth
As of today, Aramark currently has a 12-month trailing dividend yield of 1.39% and a 12-month forward dividend yield of 1.25%. This suggests an anticipated decrease in dividend payments over the next 12 months. Over a five-year horizon, the dividend growth rate has increased to 0.70% per year. Based on Aramark's dividend yield and five-year growth rate, the 5-year yield on cost of Aramark stock as of today is approximately 1.48%.
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, Aramark's dividend payout ratio is 0.32.
Aramark's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Aramark's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Aramark's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Aramark's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Aramark's revenue has increased by approximately 12.10% per year on average, a rate that outperforms approximately 71.59% of global competitors.
Concluding Thoughts on Aramark's Dividend Profile
In conclusion, Aramark's consistent dividend payments, coupled with a commendable dividend growth rate, payout ratio, and profitability, paint a promising picture for value investors. While the expectation of a decreased dividend yield in the near term warrants attention, the company's solid growth metrics suggest a strong foundation for future dividend sustainability. Value investors seeking to expand their portfolio with high-dividend yield stocks can explore further using the High Dividend Yield Screener available to GuruFocus Premium users.
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.
