CDW Corp's Dividend Analysis
Decoding the Dividend Prospects of CDW Corp
CDW Corp (NASDAQ:CDW) recently announced a dividend of $0.62 per share, payable on 2023-12-12, 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 CDW Corp's dividend performance and assess its sustainability.
What Does CDW Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
CDW Corp is a value-added reseller operating primarily in the U.S. (95% of sales) and Canada (5%). The company offers over 100,000 products, ranging from notebooks to data center software. CDW Corp's customer base is diverse, with roughly half of its revenue coming from midsize and large businesses, and the remaining from small businesses, government agencies, education institutions, and health-care organizations.
A Glimpse at CDW Corp's Dividend History
CDW Corp has maintained a consistent dividend payment record since 2013, distributing dividends quarterly. The company has not only consistently paid dividends but also increased them annually, earning it the status of a dividend achievera title reserved for companies that have raised their dividends each year for at least a decade. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down CDW Corp's Dividend Yield and Growth
As of today, CDW Corp has a 12-month trailing dividend yield of 1.10% and a 12-month forward dividend yield of 1.15%, indicating an anticipated increase in dividend payments over the next year. Over the past three years, CDW Corp's annual dividend growth rate was 18.20%, which further increased to 24.10% per year over a five-year period. Consequently, the 5-year yield on cost for CDW Corp stock is approximately 3.24%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. CDW Corp's dividend payout ratio is 0.29 as of 2023-09-30, suggesting a conservative approach to dividend distribution, with ample earnings retained for growth and stability. Additionally, CDW Corp's profitability rank is outstanding at 9 out of 10, indicating excellent earnings potential relative to peers. The company has also reported positive net income annually for the past decade, reinforcing its financial health.
Growth Metrics: The Future Outlook
For dividend sustainability, robust growth metrics are essential. CDW Corp's growth rank is an impressive 9 out of 10, reflecting a strong growth trajectory. The company's revenue per share and 3-year revenue growth rate of 12.40% per year outperform approximately 59.95% of global competitors. Furthermore, CDW Corp's 3-year EPS growth rate of 25.20% per year surpasses about 71.63% of global competitors, while its 5-year EBITDA growth rate of 23.70% outperforms roughly 72.31% of global companies.
Investor Takeaway
CDW Corp's consistent dividend payments, robust growth rate, prudent payout ratio, and strong profitability and growth metrics paint a picture of a company committed to rewarding shareholders while maintaining financial stability. Investors seeking to diversify their portfolios with a resilient dividend-paying stock may consider CDW Corp as a compelling option. With its forward-looking growth strategy and proven track record, CDW Corp continues to demonstrate its ability to navigate the dynamic tech reselling landscape, positioning itself as a potentially lucrative investment for value investors.
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.
