Computershare Ltd's Dividend Analysis
An In-Depth Look at Computershare Ltd's Upcoming Dividend and Financial Health
Computershare Ltd (CMSQY) recently announced a dividend of $0.4 per share, payable on 2024-03-21, with the ex-dividend date set for 2024-02-20. 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 Computershare Ltd's dividend performance and assess its sustainability.
What Does Computershare Ltd Do?
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Founded in Australia in 1978, Computershare has grown via acquisitions to become the world's leading provider of issuer services. Employee share plans and communications services are commonly sold together with issuer services to corporations. The company also operates a retail mortgage administration business, alongside a business services business and a corporate trust business. Over the medium term, around half of group EBITDA is expected to be generated from interest income on client cash balances, or margin income, which is exposed to interest-rate movements.
A Glimpse at Computershare Ltd's Dividend History
Computershare Ltd has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Computershare Ltd's Dividend Yield and Growth
As of today, Computershare Ltd currently has a 12-month trailing dividend yield of 4.10% and a 12-month forward dividend yield of 4.68%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Computershare Ltd's annual dividend growth rate was 11.70%. Extended to a five-year horizon, this rate decreased to 7.60% per year. And over the past decade, Computershare Ltd's annual dividends per share growth rate stands at 7.40%.
Based on Computershare Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Computershare Ltd stock as of today is approximately 5.91%.
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 2023-06-30, Computershare Ltd's dividend payout ratio is 0.82, which may suggest that the company's dividend may not be sustainable.
Computershare Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Computershare Ltd's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Computershare Ltd's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Computershare Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Computershare Ltd's revenue has increased by approximately 9.00% per year on average, a rate that outperforms approximately 54.14% 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, Computershare Ltd's earnings increased by approximately 25.50% per year on average, a rate that outperforms approximately 67.37% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.40%, which outperforms approximately 39.4% of global competitors.
Next Steps
In conclusion, Computershare Ltd presents a compelling case for dividend investors, with a history of consistent dividend payments and a promising dividend growth rate. However, the relatively high payout ratio warrants a cautious approach, as it may challenge the sustainability of future dividends. Nevertheless, the company's strong profitability and growth metrics suggest a robust financial foundation that could support ongoing dividend payments. Investors should consider these factors alongside their investment strategy and risk tolerance when evaluating Computershare Ltd as a potential addition to their portfolios. For those interested in exploring further, 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.
