Dividend Analysis: A Closer Look at Husqvarna AB's Upcoming Dividend
Unpacking the Dividend Performance and Sustainability of Husqvarna AB (HSQVY)
Husqvarna AB(HSQVY) recently announced a dividend of $0.38 per share, payable on 0000-00-00, with the ex-dividend date set for 2023-10-05. 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 deep dive into Husqvarna ABs dividend performance and assess its sustainability.
About Husqvarna AB
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Husqvarna AB makes outdoor power products for forest, park, and garden care. The company operates three business segments: Husqvarna, Gardena, and Construction. The Husqvarna segment generates most of the group's revenue. It manufactures and sells outdoor products such as chainsaws, trimmers, mowers, and park and garden care. The other segments offer garden watering and hand tools, as well as professional equipment and diamond tools for cutting and drilling in concrete, stone, and asphalt. Products are sold under the Husqvarna, Gardena, McCulloch, Poulan Pro, Weed Eater, Flymo, Zenoah, and Diamant Boart brands. The company's largest end markets are North America and Europe.
Husqvarna AB's Dividend History
Husqvarna AB has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Husqvarna AB's Dividend Yield and Growth
As of today, Husqvarna AB currently has a 12-month trailing dividend yield of 3.72% and a 12-month forward dividend yield of 3.93%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Husqvarna AB's annual dividend growth rate was 10.10%. Extended to a five-year horizon, this rate decreased to 6.90% per year. And over the past decade, Husqvarna AB's annual dividends per share growth rate stands at 7.10%.
Based on Husqvarna AB's dividend yield and five-year growth rate, the 5-year yield on cost of Husqvarna AB stock as of today is approximately 5.19%.
Dividend Sustainability: 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, Husqvarna AB's dividend payout ratio is 0.88. This may suggest that the company's dividend may not be sustainable.
Husqvarna AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Husqvarna AB's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Assessing Husqvarna AB's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Husqvarna AB'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 Husqvarna AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Husqvarna AB's revenue has increased by approximately 8.50% per year on average, a rate that outperforms than approximately 56.67% 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, Husqvarna AB's earnings increased by approximately -8.60% per year on average, a rate that outperforms than approximately 23.5% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.80%, which outperforms than approximately 44.63% of global competitors.
Conclusion
While Husqvarna AB's consistent dividend payments, strong dividend yield, and robust growth metrics paint a promising picture, the relatively high payout ratio may raise concerns about the sustainability of its dividends. However, the company's solid profitability rank and positive net income over the past decade could alleviate some of these concerns. Ultimately, investors should consider these factors in their decision-making process.
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This article first appeared on GuruFocus.
