FirstCash Holdings Inc's Dividend Analysis
Assessing the Sustainability and Growth of FCFS's Dividends
FirstCash Holdings Inc (NASDAQ:FCFS) recently announced a dividend of $0.35 per share, payable on 2024-02-28, with the ex-dividend date set for 2024-02-13. 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 FirstCash Holdings Inc's dividend performance and assess its sustainability.
What Does FirstCash Holdings Inc Do?
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FirstCash Holdings Inc operates pawn stores in the United States and Latin America. Its primary business involves making small loans secured by personal property. The company has three reportable segments: U.S. pawn; Latin America pawn; and Retail POS payment solutions (AFF). It derives majority revenue from U.S. Pawn segment. These pawn loans give the borrower the option of either repaying the loans with interest or forfeiting the property without further penalty. Close to 30% of total company revenue comes from interest earned on the loans. Close to 70% of total revenue comes from reselling forfeited property in the company's retail stores.
A Glimpse at FirstCash Holdings Inc's Dividend History
FirstCash Holdings Inc has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down FirstCash Holdings Inc's Dividend Yield and Growth
As of today, FirstCash Holdings Inc currently has a 12-month trailing dividend yield of 1.15% and a 12-month forward dividend yield of 1.18%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, FirstCash Holdings Inc's annual dividend growth rate was 8.00%. Extended to a five-year horizon, this rate increased to 8.10% per year. Based on FirstCash Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of FirstCash Holdings Inc stock as of today is approximately 1.71%.
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, FirstCash Holdings Inc's dividend payout ratio is 0.22.
FirstCash Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks FirstCash Holdings Inc'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. FirstCash Holdings 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 FirstCash Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. FirstCash Holdings Inc's revenue has increased by approximately 20.70% per year on average, a rate that outperforms approximately 77.16% 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, FirstCash Holdings Inc's earnings increased by approximately 26.30% per year on average, a rate that outperforms approximately 74.62% of global competitors.
Last but not least, the company's 5-year EBITDA growth rate of 11.60%, which outperforms approximately 59.86% of global competitors, further enhances the company's growth profile.
Engaging Conclusion: Dividend Prospects and Investment Considerations
With a stable dividend history, a modest yet growing yield, and a low payout ratio, FirstCash Holdings Inc presents an attractive profile for dividend investors. The company's strong profitability and promising growth metrics bolster confidence in the sustainability of its dividends. Investors should consider FirstCash Holdings Inc's strategic positioning in the financial services sector, its consistent performance, and potential for future growth when evaluating the stock as a component of their income-generating portfolio. Will FirstCash Holdings Inc continue its trajectory of dividend growth, and how will it adapt to the evolving economic landscape? These are key questions for investors to ponder as they assess the company's long-term value proposition.
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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.
