Equinix Inc's Dividend Analysis
Assessing the Sustainability of Equinix Inc's Upcoming Dividend
Equinix Inc (NASDAQ:EQIX) recently announced a dividend of $4.26 per share, payable on 2024-03-20, with the ex-dividend date set for 2024-02-27. 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 Equinix Inc's dividend performance and assess its sustainability.
What Does Equinix Inc Do?
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Equinix operates 260 data centers in 71 markets worldwide. It generates 44% of total revenue in the Americas, 35% in Europe, the Middle East, and Africa, and 21% in Asia-Pacific. The firm has more than 10,000 customers, including 2,100 network providers, that are dispersed over five verticals: cloud and IT services, content providers, network and mobile services, financial services, and enterprise. About 70% of Equinix's revenue comes from renting space to tenants and related services, and more than 15% comes from interconnection. Equinix operates as a real estate investment trust.
A Glimpse at Equinix Inc's Dividend History
Equinix Inc has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Equinix Inc's Dividend Yield and Growth
As of today, Equinix Inc currently has a 12-month trailing dividend yield of 1.64% and a 12-month forward dividend yield of 1.93%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Equinix Inc's annual dividend growth rate was 10.80%. Extended to a five-year horizon, this rate decreased to 9.20% per year. Based on Equinix Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Equinix Inc stock as of today is approximately 2.55%.
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, Equinix Inc's dividend payout ratio is 1.40, which may suggest that the company's dividend may not be sustainable.
Equinix Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Equinix Inc's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Equinix Inc'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 Equinix Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Equinix Inc's revenue has increased by approximately 8.70% per year on average, a rate that outperforms approximately 77.47% 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, Equinix Inc's earnings increased by approximately 21.00% per year on average, a rate that outperforms approximately 74.86% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 12.20%, which outperforms approximately 77.87% of global competitors.
Next Steps
When considering Equinix Inc's dividend payments, investors should find reassurance in the company's consistent dividend history and its potential for dividend growth. However, the relatively high payout ratio may raise concerns about the long-term sustainability of these dividends. Nevertheless, Equinix Inc's strong profitability and growth metrics could provide the necessary support for future dividend payments. Investors should weigh these factors carefully, alongside industry trends and the company's strategic initiatives, to determine the attractiveness of Equinix Inc as an income-generating investment. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for more insights.
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.
