Farmland Partners Inc: A Deep Dive into Its Dividend Performance and Sustainability
Exploring the Dividend History, Yield, and Growth Rates of Farmland Partners Inc
Farmland Partners Inc (NYSE:FPI) recently announced a dividend of $0.06 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-09-29. As investors anticipate this upcoming payment, attention also turns to the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Farmland Partners Inc's dividend performance and assess its sustainability.
Understanding Farmland Partners Inc's Business Model
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Farmland Partners Inc owns and seeks to acquire high-quality farmland throughout North America. The company, an internally managed real estate entity, owns and contracts farmland and storage facilities across the United States. With over 100 tenants growing more than 26 commercial crops, Farmland Partners generates its revenues through the rent it receives from these tenants.
Tracing Farmland Partners Inc's Dividend History
Farmland Partners Inc has upheld a consistent dividend payment record since 2014, with dividends currently distributed on a quarterly basis. The chart below provides a historical perspective on the company's annual Dividends Per Share.
Analyzing Farmland Partners Inc's Dividend Yield and Growth
As of today, Farmland Partners Inc has a 12-month trailing dividend yield and a 12-month forward dividend yield of 2.33%, suggesting an expectation of consistent dividend payments over the next 12 months.
Over the past three years, Farmland Partners Inc's annual dividend growth rate was 4.80%. However, when extended to a five-year horizon, this rate decreased to -15.00% per year. Based on the company's dividend yield and five-year growth rate, the 5-year yield on cost of Farmland Partners Inc stock as of today is approximately 1.03%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
Assessing the sustainability of the dividend requires an evaluation of the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company allocates 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, Farmland Partners Inc's dividend payout ratio is 0.92, which may suggest that the company's dividend may not be sustainable.
Farmland Partners Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. As of 2023-06-30, GuruFocus ranks Farmland Partners Inc's profitability 7 out of 10, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Looking Ahead: Growth Metrics and Future Outlook
For dividends to be sustainable, a company must exhibit strong growth metrics. Farmland Partners Inc's growth rank of 7 out of 10 suggests a strong growth trajectory relative to its competitors.
Revenue is the lifeblood of any company, and Farmland Partners Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a robust revenue model. However, the company's revenue has slightly decreased by approximately -12.20% per year on average, a rate that underperforms approximately 88.05% 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, Farmland Partners Inc's earnings increased by approximately 58.70% per year on average, a rate that underperforms approximately 10.31% of global competitors.
Conclusion
Farmland Partners Inc's consistent dividend payments, coupled with a commendable profitability rank, make it an intriguing option for investors seeking steady dividends. However, the company's high payout ratio and underperforming growth rates compared to global competitors may raise concerns about the sustainability of its dividends. Investors should closely monitor these factors while considering Farmland Partners Inc for their portfolio.
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This article first appeared on GuruFocus.
