Cardinal Health Inc's Dividend Analysis
Understanding the Dividend Dynamics of Cardinal Health Inc
Cardinal Health Inc (NYSE:CAH) recently announced a dividend of $0.5 per share, payable on 2024-04-15, with the ex-dividend date set for 2024-03-28. 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 Cardinal Health Inc's dividend performance and assess its sustainability.
What Does Cardinal Health Inc Do?
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Cardinal Health is one of three leading pharmaceutical wholesalers in the U.S., engaged in sourcing and distributing of branded, generic, and specialty pharmaceutical products to pharmacies (retail chains, independent, and mail order), hospitals networks, and healthcare providers. Along with Cencora and McKesson, the three comprise well over 90% of the U.S. pharmaceutical wholesale industry. Cardinal Health also supplies medical-surgical products and equipment to healthcare facilities in North America, Europe, and Asia.
A Glimpse at Cardinal Health Inc's Dividend History
Cardinal Health Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Cardinal Health Inc has increased its dividend each year since 1988. 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 36 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Cardinal Health Inc's Dividend Yield and Growth
As of today, Cardinal Health Inc currently has a 12-month trailing dividend yield of 1.80% and a 12-month forward dividend yield of 1.80%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Cardinal Health Inc's annual dividend growth rate was 1.00%. Extended to a five-year horizon, this rate increased to 1.20% per year. And over the past decade, Cardinal Health Inc's annual dividends per share growth rate stands at 5.80%.
Based on Cardinal Health Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Cardinal Health Inc stock as of today is approximately 1.91%.
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, Cardinal Health Inc's dividend payout ratio is 0.29.
Cardinal Health Inc's profitability rank, which offers an understanding of the company's earnings prowess relative to its peers, stands at 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. 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. Cardinal Health Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Cardinal Health Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cardinal Health Inc's revenue has increased by approximately 14.50% per year on average, a rate that outperforms approximately 75% 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, Cardinal Health Inc's earnings increased by approximately 2.00% per year on average, a rate that outperforms approximately 40% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.80%, which outperforms approximately 24.19% of global competitors, further underscores its financial health.
Next Steps
In conclusion, Cardinal Health Inc's consistent dividend payments, coupled with a modest but steady dividend growth rate, a manageable payout ratio, and strong profitability and growth metrics, paint a picture of a company that's committed to rewarding shareholders while maintaining financial flexibility for future opportunities. As value investors analyze these factors, they can gain insights into the company's ability to sustain its dividend payments amidst industry trends and economic cycles. With a solid track record and a strategic position in the pharmaceutical supply chain, Cardinal Health Inc may continue to be a compelling choice for dividend-seeking investors.
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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.
