California Water Service Group's Dividend Analysis
An In-depth Look at the California Water Service Group's Dividend Performance and Sustainability
California Water Service Group (NYSE:CWT) recently announced a dividend of $0.26 per share, payable on 2023-11-17, with the ex-dividend date set for 2023-11-03. 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 delve into California Water Service Group's dividend performance and assess its sustainability.
About California Water Service Group
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California Water Service Group is a U.S. water and utilities holding company based in California. The company engages in the production, treatment, storage, distribution, and sale of water for various uses. The firm operates through its subsidiaries, which can be divided between regulated and unregulated businesses. The regulated public utilities subsidiaries operate in California, New Mexico, Washington, and Hawaii. The unregulated subsidiaries provide water utility services to private companies and municipalities. The company derives the majority of its revenue from its operations in California and, overall, from residential customers.
California Water Service Group's Dividend History
California Water Service Group has maintained a consistent dividend payment record since 1968. Dividends are currently distributed on a quarterly basis. The company has increased its dividend each year since 1968, earning it the title of a dividend king, a distinction given to companies that have increased their dividend each year for at least the past 55 years.
California Water Service Group's Dividend Yield and Growth
As of today, California Water Service Group has a 12-month trailing dividend yield of 2.02% and a 12-month forward dividend yield of 2.04%, suggesting an expectation of increased dividend payments over the next 12 months.
Over the past three years, California Water Service Group's annual dividend growth rate was 8.20%. This rate decreased to 6.90% per year over a five-year horizon. Over the past decade, California Water Service Group's annual dividends per share growth rate stands at 4.60%.
Based on California Water Service Group's dividend yield and five-year growth rate, the 5-year yield on cost of California Water Service Group stock as of today is approximately 2.82%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
The dividend payout ratio of California Water Service Group, as of 2023-09-30, is 1.39, which may suggest that the company's dividend may not be sustainable. This ratio indicates 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.
California Water Service Group's profitability rank is 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of the past decade, further solidifying its high profitability.
Growth Metrics and Future Outlook
California Water Service Group's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. However, California Water Service Group's revenue has increased by approximately 1.60% per year on average, a rate that underperforms approximately 78.19% 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, California Water Service Group's earnings increased by approximately 15.00% per year on average, a rate that underperforms approximately 29.23% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.20% underperforms approximately 42.45% of global competitors.
Conclusion
While California Water Service Group has a commendable history of consistent and growing dividends, its high payout ratio and underperformance in revenue and earnings growth relative to global competitors raise concerns about the sustainability of its dividends. Nevertheless, its strong profitability rank and growth rank suggest potential for future growth. Investors should keep a close eye on these metrics and the company's future performance to make informed decisions.
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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.
