H.B. Fuller Co's Dividend Analysis
Assessing the Sustainability and Growth of FUL's Dividends
H.B. Fuller Co (NYSE:FUL) recently announced a dividend of $0.21 per share, payable on 2024-02-21, with the ex-dividend date set for 2024-02-06. 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 H.B. Fuller Co's dividend performance and assess its sustainability.
What Does H.B. Fuller Co Do?
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H.B. Fuller Co manufactures and sells adhesives, sealants, and other chemical-based products. The company organizes itself into three segments: Hygiene, Health and Consumable Adhesives, Engineering Adhesives and Construction Adhesives. It generates the maximum revenue from hygiene, health and consumable adhesives. This segment produces and supplies a full range of specialty industrial adhesives such as thermoplastic, thermoset, reactive, water-based and solvent-based products for applications in various markets, including packaging, converting, nonwoven and hygiene (disposable diapers, feminine care and medical garments) and health and beauty. The company generates around half of its revenue in the United States, with the remainder spread across 35 countries.
A Glimpse at H.B. Fuller Co's Dividend History
H.B. Fuller Co has maintained a consistent dividend payment record since 1970, with dividends distributed on a quarterly basis. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 54 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down H.B. Fuller Co's Dividend Yield and Growth
As of today, H.B. Fuller Co currently has a 12-month trailing dividend yield of 1.06% and a 12-month forward dividend yield of 1.08%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, H.B. Fuller Co's annual dividend growth rate was 7.50%. Extended to a five-year horizon, this rate decreased to 5.40% per year. And over the past decade, H.B. Fuller Co's annual dividends per share growth rate stands at 6.40%.
Based on H.B. Fuller Co's dividend yield and five-year growth rate, the 5-year yield on cost of H.B. Fuller Co stock as of today is approximately 1.38%.
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 2023-11-30, H.B. Fuller Co's dividend payout ratio is 0.23.
H.B. Fuller Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks H.B. Fuller Co's profitability 7 out of 10 as of 2023-11-30, 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. H.B. Fuller Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. H.B. Fuller Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. H.B. Fuller Co's revenue has increased by approximately 5.70% per year on average, a rate that underperforms approximately 63.62% 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, H.B. Fuller Co's earnings increased by approximately 17.20% per year on average, a rate that underperforms approximately 42.4% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.80%, which underperforms approximately 56.3% of global competitors.
Next Steps
Considering H.B. Fuller Co's longstanding history of dividend payments, its status as a dividend king, and a dividend growth rate that has been consistent over the years, the company presents a compelling case for investors looking for stable dividend income. The modest payout ratio and good profitability rank suggest that the dividends are sustainable in the near term. However, the growth metrics, while solid, indicate that the company's growth is not leading the pack, which could impact future dividend increases. Investors should weigh these factors and consider their investment horizon and income needs. For those seeking to expand their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener for further research.
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.
