Diageo PLC's Dividend Analysis
Exploring the Dividend Profile of a Premier Beverage Giant
Diageo PLC (NYSE:DEO) recently announced a dividend of $1.62 per share, payable on 2024-04-17, with the ex-dividend date set for 2024-02-29. 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 Diageo PLC's dividend performance and assess its sustainability.
What Does Diageo PLC Do?
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Diageo PLC, a product of a merger between Grand Metropolitan and Guinness in 1997, stands as one of the world's leading producers of branded premium spirits. Its portfolio is on par with Kweichow Moutai in terms of revenue and includes iconic brands such as Johnnie Walker, Smirnoff, and Guinness. The company's reach extends into the luxury sector through its stakes in Moet Hennessy and India's United Spirits. This diverse brand portfolio has positioned Diageo as a significant player in the global beverage industry.
A Glimpse at Diageo PLC's Dividend History
Since 1990, Diageo PLC has upheld a strong record of consistent dividend payments, disbursed bi-annually to shareholders. This enduring commitment to returning value to investors is a testament to the company's financial robustness and strategic planning. The chart below illustrates the historical trends of Diageo PLC's annual Dividends Per Share.
Breaking Down Diageo PLC's Dividend Yield and Growth
Diageo PLC boasts a 12-month trailing dividend yield of 2.57%, and a forward dividend yield of 2.62%, indicating an anticipated increase in dividend payouts. Over the past three years, the company's dividend growth rate was 3.60%, which rose to 3.90% over a five-year period. The decade-long growth rate stands impressively at 5.30%. The 5-year yield on cost for Diageo PLC stock is approximately 3.11%, reflecting the company's progressive dividend policy.
The Sustainability Question: Payout Ratio and Profitability
Assessing dividend sustainability, Diageo PLC's dividend payout ratio is 0.46 as of 2023-12-31, suggesting a healthy balance between distributing earnings and retaining capital for growth. The company's profitability rank stands at an impressive 9 out of 10, indicating robust earnings potential compared to its peers. Diageo PLC has consistently reported positive net income for the past decade, reinforcing its financial stability.
Growth Metrics: The Future Outlook
Diageo PLC's growth rank of 9 out of 10 signals a strong growth trajectory. The company's revenue per share and 3-year revenue growth rate of 14.70% per year outperform approximately 73.37% of global competitors. Diageo PLC's 3-year EPS growth rate of 14.40% per year and 5-year EBITDA growth rate of 6.30% further demonstrate its ability to sustain dividend payments through solid earnings and operational efficiency.
Concluding Insights on Diageo PLC's Dividend Profile
Diageo PLC's dividend payments, growth rates, payout ratio, and profitability metrics paint the picture of a company committed to delivering shareholder value through consistent dividends. With a strong growth outlook and a prudent approach to earnings distribution, Diageo PLC stands as a potentially attractive option for value investors focused on long-term income. As the company continues to navigate the dynamic beverage industry, its strategic initiatives and competitive position may further enhance its dividend prospects, making it an interesting watch for those seeking stable dividend-paying stocks.
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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.
