HP Inc's Dividend Analysis
Unpacking the Dividend Profile of HP Inc (NYSE:HPQ)
HP Inc (NYSE:HPQ) recently announced a dividend of $0.28 per share, payable on 2024-04-03, with the ex-dividend date set for 2024-03-12. 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 HP Inc's dividend performance and assess its sustainability.
What Does HP Inc Do?
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HP Inc, formerly Hewlett-Packard, is a behemoth in the PC and printing markets. It has focused on these markets since it exited IT infrastructure in 2015 with the split from Hewlett Packard Enterprise. HP Inc concentrates on the commercial market but maintains sales of consumer devices and printers. The firm has a broad and global customer base, with only one-third of sales coming from the US. It completely outsources manufacturing and relies heavily on channel partners for its sales and marketing.
A Glimpse at HP Inc's Dividend History
HP Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down HP Inc's Dividend Yield and Growth
As of today, HP Inc currently has a 12-month trailing dividend yield of 3.46% and a 12-month forward dividend yield of 3.59%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, HP Inc's annual dividend growth rate was 14.20%. Extended to a five-year horizon, this rate decreased to 14.00% per year. And over the past decade, HP Inc's annual dividends per share growth rate stands at 6.10%.
Based on HP Inc's dividend yield and five-year growth rate, the 5-year yield on cost of HP Inc stock as of today is approximately 6.66%.
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 2024-01-31, HP Inc's dividend payout ratio is 0.29.
HP Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks HP Inc's profitability 8 out of 10 as of 2024-01-31, suggesting good profitability prospects. The company has reported positive net income for each 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. HP 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 HP Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. HP Inc's revenue has increased by approximately 10.40% per year on average, a rate that outperforms approximately 67.4% 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, HP Inc's earnings increased by approximately 12.50% per year on average, a rate that outperforms approximately 49.43% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which outperforms approximately 36.11% of global competitors, indicates a healthy margin of profitability that could support future dividend payments.
Concluding Thoughts on HP Inc's Dividend Outlook
In conclusion, HP Inc's upcoming dividend payment reflects not only its current financial strength but also its history of consistent shareholder returns. The company's dividend growth rate, reasonable payout ratio, and strong profitability rank paint a picture of a reliable dividend payer. Moreover, the solid growth metrics suggest that HP Inc is well-positioned to continue its dividend payments in the foreseeable future. For investors seeking income-generating stocks, HP Inc appears to be an attractive option. Will HP Inc maintain its dividend performance streak in the years to come? That remains a key question for investors monitoring the company's financial health and market position.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
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.
