Ecolab Inc's Dividend Analysis
Understanding Ecolab Inc's Dividend Prospects and Sustainability
Ecolab Inc (NYSE:ECL) recently announced a dividend of $0.57 per share, payable on 2024-01-16, with the ex-dividend date set for 2023-12-18. 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 Ecolab Inc's dividend performance and assess its sustainability.
What Does Ecolab Inc Do?
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Ecolab produces and markets cleaning and sanitation products for the industrial manufacturing, hospitality, healthcare, and life sciences markets. The firm is the global market share leader in this category with a wide array of products and services, including dish and laundry washing systems, pest control, and infection control products. Additionally, Ecolab sells customized water management solutions across its end markets. The company has a strong hold on the U.S. market and is growing its presence abroad.
A Glimpse at Ecolab Inc's Dividend History
Ecolab Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis.
Ecolab Inc 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 37 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ecolab Inc's Dividend Yield and Growth
As of today, Ecolab Inc currently has a 12-month trailing dividend yield of 1.08% and a 12-month forward dividend yield of 1.16%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Ecolab Inc's annual dividend growth rate was 3.60%. Extended to a five-year horizon, this rate increased to 5.80% per year. And over the past decade, Ecolab Inc's annual dividends per share growth rate stands at 9.20%.
Based on Ecolab Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ecolab Inc stock as of today is approximately 1.43%.
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, Ecolab Inc's dividend payout ratio is 0.49.
Ecolab Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ecolab Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Ecolab Inc's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Ecolab Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ecolab Inc's revenue has increased by approximately 4.90% per year on average, a rate that underperforms approximately 66.51% 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, Ecolab Inc's earnings increased by approximately -4.30% per year on average, a rate that underperforms approximately 72.21% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.10%, which underperforms approximately 75.08% of global competitors.
Next Steps
In conclusion, while Ecolab Inc's dividend history and growth rates paint a picture of a company committed to returning value to shareholders, the sustainability of its dividends is a nuanced subject. The payout ratio and profitability rank indicate a healthy balance between paying dividends and retaining earnings for future investments. However, growth metrics suggest that Ecolab Inc faces challenges in revenue and earnings growth, which could impact its ability to sustain dividend increases in the long run. Investors should consider these factors in their overall assessment of Ecolab Inc's dividend prospects.
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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.
