Baker Hughes Co's Dividend Analysis
Understanding the Dividend Profile of Baker Hughes Co
Baker Hughes Co (NASDAQ:BKR) recently announced a dividend of $0.21 per share, payable on 2024-02-23, with the ex-dividend date set for 2024-02-12. 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 Baker Hughes Co's dividend performance and assess its sustainability.
What Does Baker Hughes Co Do?
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Baker Hughes is a global leader in oilfield services and oilfield equipment, with particularly strong presences in the artificial lift, specialty chemicals, and completions markets. It maintains modest exposure to offshore oil and gas production. The other half of its business focuses on industrial power generation, process solutions, and industrial asset management, with high exposure to the liquid natural gas market specifically, as well as broader industrials end markets.
A Glimpse at Baker Hughes Co's Dividend History
Baker Hughes Co has maintained a consistent dividend payment record since 2017, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Baker Hughes Co's Dividend Yield and Growth
As of today, Baker Hughes Co currently has a 12-month trailing dividend yield of 2.66% and a 12-month forward dividend yield of 2.86%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Baker Hughes Co's annual dividend growth rate was 2.70%, which decreased to 1.30% per year when extended to a five-year horizon. Based on Baker Hughes Co's dividend yield and five-year growth rate, the 5-year yield on cost of Baker Hughes Co stock as of today is approximately 2.88%.
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, Baker Hughes Co's dividend payout ratio is 0.40. Baker Hughes Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Baker Hughes Co's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 4 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. Baker Hughes Co's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Baker Hughes Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Baker Hughes Co's revenue has increased by approximately -6.40% per year on average, a rate that underperforms approximately 80.77% 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, Baker Hughes Co's earnings increased by approximately -44.20% per year on average, a rate that underperforms approximately 94.07% of global competitors.
Next Steps
In conclusion, while Baker Hughes Co maintains a consistent dividend payment record and a reasonable dividend yield, the company's growth and profitability metrics present a mixed picture. The fair growth outlook, combined with a moderate profitability rank, suggests a cautious approach to the sustainability of future dividends. Investors should consider the company's ability to navigate industry challenges and capitalize on opportunities as they weigh the prospects of Baker Hughes Co's dividend payments. With the upcoming dividend payout, it's an opportune time to analyze the company's financial health and future potential. 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.
