AstraZeneca PLC's Dividend Analysis
Unveiling AstraZeneca PLC's Dividend Dynamics
AstraZeneca PLC (NASDAQ:AZN) recently announced a dividend of $0.99 per share, payable on 2024-03-25, with the ex-dividend date set for 2024-02-22. 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 AstraZeneca PLC's dividend performance and assess its sustainability.
What Does AstraZeneca PLC Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
A merger between Astra of Sweden and Zeneca Group of the United Kingdom formed AstraZeneca in 1999. The firm sells branded drugs across several major therapeutic classes, including gastrointestinal, diabetes, cardiovascular, respiratory, cancer, immunology and rare diseases. The majority of sales come from international markets with the United States representing close to one third of its revenue.
A Glimpse at AstraZeneca PLC's Dividend History
AstraZeneca PLC has maintained a consistent dividend payment record since 1993. Dividends are currently distributed on a bi-annually basis.
AstraZeneca PLC has increased its dividend each year since 2013. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 11 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down AstraZeneca PLC's Dividend Yield and Growth
As of today, AstraZeneca PLC currently has a 12-month trailing dividend yield of 2.25% and a 12-month forward dividend yield of 2.25%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, AstraZeneca PLC's annual dividend growth rate was 2.90%. Extended to a five-year horizon, this rate decreased to 1.30% per year. And over the past decade, AstraZeneca PLC's annual dividends per share growth rate stands at 2.60%.
Based on AstraZeneca PLC's dividend yield and five-year growth rate, the 5-year yield on cost of AstraZeneca PLC stock as of today is approximately 2.40%.
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, AstraZeneca PLC's dividend payout ratio is 0.78, which may suggest that the company's dividend may not be sustainable.
AstraZeneca PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks AstraZeneca PLC's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of 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. AstraZeneca PLC'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 AstraZeneca PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. AstraZeneca PLC's revenue has increased by approximately 15.40% per year on average, a rate that outperforms approximately 78.06% 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, AstraZeneca PLC's earnings increased by approximately 27.10% per year on average, a rate that outperforms approximately 71.62% of global competitors.
Engaging Conclusion: Assessing Dividend Viability
In conclusion, AstraZeneca PLC's forthcoming dividend, alongside its history of consistent payouts and moderate growth, presents an attractive proposition for income-focused investors. However, the relatively high payout ratio warrants a cautious approach, as it may indicate potential challenges in sustaining dividend growth over the long term. With its strong profitability and growth metrics, AstraZeneca PLC appears to be in a good position to maintain its dividend payments, but investors should continue to monitor these indicators to ensure ongoing viability. Will AstraZeneca PLC continue to be a reliable source of dividends for value investors? Only time will tell, but the current signs are promising. 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.
