Dividend Analysis: The Toro Co's Record of Consistent Payouts and Growth
A comprehensive look at The Toro Co's dividend performance, sustainability, and future outlook
The Toro Co(NYSE:TTC) recently announced a dividend of $0.34 per share, payable on 2023-10-18, with the ex-dividend date set for 2023-10-03. 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 The Toro Co's dividend performance and assess its sustainability.
Company Overview: The Toro Co
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The Toro Co manufactures turf maintenance and landscaping equipment. The company produces reel and rotary riding products, trim cutting and walking mowers, greens rollers, turf sprayer equipment, underground irrigation systems, heavy-duty walk-behind mowers, and sprinkler systems used for professional turf and landscape maintenance and construction. Its products are marketed through a network of distributors and dealers to primarily professional users maintaining turfs and sports fields such as golf courses. Its operating segments are Professional and Residential. The company also produces snow plowers and ice management products. Its largest end market is the United States.
Tracing The Toro Co's Dividend History
The Toro Co has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. The Toro Co has increased its dividend each year since 1985. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 38 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Understanding The Toro Co's Dividend Yield and Growth
As of today, The Toro Co currently has a 12-month trailing dividend yield of 1.60% and a 12-month forward dividend yield of 1.65%. This suggests an expectation of increase dividend payments over the next 12 months.
The Toro Co's dividend yield of 1.60% is near a 10-year high and outperforms than 46.28 of global competitors in the Industrial Products industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Over the past three years, The Toro Co's annual dividend growth rate was 10.10%. Extended to a five-year horizon, this rate increased to 10.90% per year. And over the past decade, The Toro Co's annual dividends per share growth rate stands at an impressive 17.80%.
Based on The Toro Co's dividend yield and five-year growth rate, the 5-year yield on cost of The Toro Co stock as of today is approximately 2.68%.
Evaluating 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 2023-07-31, The Toro Co's dividend payout ratio is 0.37.
The Toro Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Toro Co's profitability 9 out of 10 as of 2023-07-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Assessing Future Growth Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. The Toro Co'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 The Toro Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Toro Co's revenue has increased by approximately 13.80% per year on average, a rate that outperforms than approximately 69.64% 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, The Toro Co's earnings increased by approximately 18.40% per year on average, a rate that outperforms than approximately 59.43% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.70%, which outperforms than approximately 58.43% of global competitors.
Conclusion: The Toro Co's Dividend Outlook
Given The Toro Co's consistent dividend payments, impressive growth rate, reasonable payout ratio, high profitability, and robust growth metrics, it appears to be a compelling dividend stock. However, as with all investments, potential investors should conduct their own research and consider the company's financial health, industry position, and market conditions before making investment decisions. Will you be adding The Toro Co to your dividend portfolio?
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This article first appeared on GuruFocus.
