Eaton Corp PLC's Dividend Analysis
Insights into Eaton Corp PLC's Upcoming Dividend Payment
Eaton Corp PLC (NYSE:ETN) recently announced a dividend of $0.94 per share, payable on 2024-03-29, with the ex-dividend date set for 2024-03-08. 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 Eaton Corp PLC's dividend performance and assess its sustainability.
What Does Eaton Corp PLC Do?
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Eaton is a diversified power management company operating for over 100 years. The company operates through various segments, including electrical Americas, electrical global, aerospace, vehicle, and eMobility. Eaton's portfolio can broadly be divided into two halves. One part of its portfolio is housed under its industrial sector umbrella, which serves a large variety of end markets like commercial vehicles, general aviation, and trucks. The other portion is Eaton's electrical sector portfolio, which serves data centers, utilities, and the residential end market, among others. While the company receives favorable tax treatment with its Ireland domicile, most of its operations are in the U.S.
A Glimpse at Eaton Corp PLC's Dividend History
Eaton Corp PLC has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis.
Eaton Corp PLC has increased its dividend each year since 1986. 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.
Breaking Down Eaton Corp PLC's Dividend Yield and Growth
As of today, Eaton Corp PLC currently has a 12-month trailing dividend yield of 1.16% and a 12-month forward dividend yield of 1.19%. This suggests an expectation of increased dividend payments over the next 12 months.
Eaton Corp PLC's dividend yield of 1.16% is near a 10-year low and underperforms than 64.99% of global competitors in the Industrial Products industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Eaton Corp PLC's annual dividend growth rate was 5.60%. Extended to a five-year horizon, this rate decreased to 5.20% per year. And over the past decade, Eaton Corp PLC's annual dividends per share growth rate stands at 6.80%.
Based on Eaton Corp PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Eaton Corp PLC stock as of today is approximately 1.49%.
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 2023-12-31, Eaton Corp PLC's dividend payout ratio is 0.38.
Eaton Corp PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eaton Corp PLC's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Eaton Corp PLC'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 Eaton Corp PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Eaton Corp PLC's revenue has increased by approximately 9.40% per year on average, a rate that outperforms approximately 56.97% 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, Eaton Corp PLC's earnings increased by approximately 22.90% per year on average, a rate that outperforms approximately 65.26% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.90%, which outperforms approximately 59.05% of global competitors.
Next Steps
In conclusion, Eaton Corp PLC's consistent dividend payments, robust dividend growth rate, prudent payout ratio, and strong profitability and growth metrics paint a positive picture for current and prospective investors. The company's ability to sustain and grow its dividends is underpinned by solid financial health and favorable growth prospects. As value investors consider their next moves, Eaton Corp PLC's dividend profile may represent a compelling opportunity within the power management sector. For a deeper dive into high-dividend yield opportunities, GuruFocus Premium users can utilize 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.
