CSX Corp's Dividend Analysis
Assessing the Sustainability and Growth of CSX Corp's Dividends
CSX Corp (NASDAQ:CSX) recently announced a dividend of $0.11 per share, payable on 2023-12-15, with the ex-dividend date set for 2023-11-29. 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 CSX Corp's dividend performance and assess its sustainability.
What Does CSX Corp Do?
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Operating in the Eastern United States, Class I railroad CSX Corp generated revenue near $14.8 billion in 2022. On its more than 21,000 miles of track, CSX Corp hauls shipments of coal (16% of consolidated revenue), chemicals (17%), intermodal containers (16%), automotive cargo (7%), and a diverse mix of other bulk and industrial merchandise.
A Glimpse at CSX Corp's Dividend History
CSX Corp has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. CSX Corp has increased its dividend each year since 2002. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 21 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down CSX Corp's Dividend Yield and Growth
As of today, CSX Corp has a 12-month trailing dividend yield of 1.33% and a 12-month forward dividend yield of 1.36%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, CSX Corp's annual dividend growth rate was 7.70%. Extended to a five-year horizon, this rate increased to 8.80% per year. And over the past decade, CSX Corp's annual dividends per share growth rate stands at 8.40%. Based on CSX Corp's dividend yield and five-year growth rate, the 5-year yield on cost of CSX Corp stock as of today is approximately 2.03%.
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, CSX Corp's dividend payout ratio is 0.23.
CSX Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks CSX Corp's profitability 8 out of 10 as of 2023-09-30, 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. CSX 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 CSX Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. CSX Corp's revenue has increased by approximately 11.70% per year on average, a rate that outperforms approximately 65.4% 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, CSX Corp's earnings increased by approximately 11.50% per year on average, a rate that outperforms approximately 49.3% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 14.90%, which outperforms approximately 60% of global competitors.
Next Steps
In conclusion, CSX Corp's commitment to increasing dividends, coupled with a moderate payout ratio and strong profitability, paints a promising picture for dividend sustainability. The company's consistent dividend growth rate and robust growth metrics further bolster investor confidence in the longevity of its dividend payments. With these factors in mind, CSX Corp appears well-positioned to continue rewarding shareholders with reliable dividends. Investors seeking to capitalize on such dividend-paying stocks can utilize tools like the GuruFocus High Dividend Yield Screener to identify similar investment opportunities.
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.
