Imperial Oil Ltd's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance
Imperial Oil Ltd (IMO) recently announced a dividend of $0.6 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-01. 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 Imperial Oil Ltd's dividend performance and assess its sustainability.
What Does Imperial Oil Ltd Do?
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Imperial Oil is one of Canada's largest integrated oil companies, focusing on upstream operations, petroleum refining operations, and the marketing of petroleum products. Production averaged 398 thousand barrels of oil equivalent per day in 2020. The company estimates that it holds 5.2 billion boe of proved and probable crude oil and natural gas reserves. Imperial remains the largest refiner of petroleum products in Canada, operating three refineries with a combined processing capacity of 421 mboe/d. The Upstream segment operates to produce crude oil and its equivalent, and natural gas. The Downstream segment operates to refine crude oil into petroleum products. The Chemical segment manufactures hydrocarbon-based chemicals and chemical products.
A Glimpse at Imperial Oil Ltd's Dividend History
Imperial Oil Ltd has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Imperial Oil Ltd's Dividend Yield and Growth
As of today, Imperial Oil Ltd currently has a 12-month trailing dividend yield of 2.34% and a 12-month forward dividend yield of 2.86%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Imperial Oil Ltd's annual dividend growth rate was 19.80%. Extended to a five-year horizon, this rate decreased to 16.30% per year. And over the past decade, Imperial Oil Ltd's annual dividends per share growth rate stands at an impressive 10.80%.
Based on Imperial Oil Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Imperial Oil Ltd stock as of today is approximately 4.98%.
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, Imperial Oil Ltd's dividend payout ratio is 0.23.
Imperial Oil Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Imperial Oil Ltd's profitability 7 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. Imperial Oil Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Imperial Oil Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Imperial Oil Ltd's revenue has increased by approximately 28.50% per year on average, a rate that outperforms approximately 77.99% 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, Imperial Oil Ltd's earnings increased by approximately 58.70% per year on average, a rate that outperforms approximately 80.46% of global competitors.
Concluding Insights on Imperial Oil Ltd's Dividend Prowess
Considering Imperial Oil Ltd's stable dividend history, promising yield, and growth rates, along with a reasonable payout ratio and strong profitability metrics, the company's dividend appears to be on solid ground. The growth metrics further underline the potential for ongoing dividend sustainability and growth, making it an attractive prospect for value investors focused on income. With these factors in mind, investors may find Imperial Oil Ltd to be a compelling addition to their dividend portfolios. 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.
