Cabot Corp's Dividend Analysis
Assessing the Sustainability of Cabot Corp's Dividends
Cabot Corp (NYSE:CBT) recently announced a dividend of $0.4 per share, payable on 2023-12-08, with the ex-dividend date set for 2023-11-22. 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 Cabot Corp's dividend performance and assess its sustainability.
What Does Cabot Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Cabot Corp manufactures and sells a variety of chemicals, materials, and chemical-based products. The company organizes itself into two segments based on the product type. The reinforcement materials segment, which generates more revenue than any other segment, sells rubber-grade carbon black products used in hoses and belts in automobiles. The performance chemicals segment sells ink-jet colorants and metal oxides used in the automotive and construction industries.
A Glimpse at Cabot Corp's Dividend History
Cabot Corp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Cabot Corp has increased its dividend each year since 1994. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 29 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Cabot Corp's Dividend Yield and Growth
As of today, Cabot Corp currently has a 12-month trailing dividend yield of 1.96% and a 12-month forward dividend yield of 2.03%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Cabot Corp's annual dividend growth rate was 3.20%. Extended to a five-year horizon, this rate increased to 3.30% per year. And over the past decade, Cabot Corp's annual dividends per share growth rate stands at 7.20%.
Based on Cabot Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Cabot Corp stock as of today is approximately 2.31%.
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 2023-09-30, Cabot Corp's dividend payout ratio is 0.20.
Cabot Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cabot Corp's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 7 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. Cabot Corp'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 Cabot Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cabot Corp's revenue has increased by approximately 14.60% per year on average, a rate that outperforms approximately 65.1% of global competitors.
Next Steps
In conclusion, Cabot Corp's consistent dividend payments, coupled with a commendable growth rate, a reasonable payout ratio, and strong profitability and growth metrics, paint a promising picture for current and potential investors. The company's ability to maintain a dividend aristocrat status further solidifies its commitment to shareholder returns. As for value investors and those interested in dividend-yielding stocks, Cabot Corp presents an attractive case for portfolio consideration. Will Cabot Corp continue its legacy of dividend growth, and should it be a staple in dividend-focused investment strategies? 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.
