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Incitec Pivot Ltd's Dividend Analysis

Assessing the Sustainability of Incitec Pivot Ltd's Upcoming Dividend

Incitec Pivot Ltd (INCZY) recently announced a dividend of $0.03 per share, payable on 2023-12-29, with the ex-dividend date set for 2023-12-01. 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 Incitec Pivot Ltd's dividend performance and assess its sustainability.

What Does Incitec Pivot Ltd Do?

Incitec Pivot is a leading global explosives company with operations in Australia, Asia, and the Americas. We estimate its share of the global commercial explosives market at about 15%. Explosives contribute around 80% of EBIT. Incitec Pivot Ltd is also a major Australian fertilizer producer and distributor and is the only Australian manufacturer of ammonium phosphates and urea. Ammonium phosphates are sold in the domestic market and exported.

Incitec Pivot Ltd's Dividend Analysis
Incitec Pivot Ltd's Dividend Analysis

A Glimpse at Incitec Pivot Ltd's Dividend History

Incitec Pivot Ltd has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Incitec Pivot Ltd's Dividend Analysis
Incitec Pivot Ltd's Dividend Analysis

Breaking Down Incitec Pivot Ltd's Dividend Yield and Growth

As of today, Incitec Pivot Ltd currently has a 12-month trailing dividend yield of 10.07% and a 12-month forward dividend yield of 5.55%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, Incitec Pivot Ltd's annual dividend growth rate was 99.50%. Extended to a five-year horizon, this rate decreased to 21.20% per year. And over the past decade, Incitec Pivot Ltd's annual dividends per share growth rate stands at -3.10%.

Based on Incitec Pivot Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Incitec Pivot Ltd stock as of today is approximately 26.34%.

Incitec Pivot Ltd's Dividend Analysis
Incitec Pivot Ltd's Dividend Analysis

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 2023-09-30, Incitec Pivot Ltd's dividend payout ratio is 1.91, which may suggest that the company's dividend may not be sustainable.

Incitec Pivot Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Incitec Pivot Ltd's profitability 7 out of 10 as of 2023-09-30, 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. Incitec Pivot 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 Incitec Pivot Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Incitec Pivot Ltd's revenue has increased by approximately 7.00% per year on average, a rate that underperforms approximately 59.31% 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, Incitec Pivot Ltd's earnings increased by approximately 40.40% per year on average, a rate that underperforms approximately 21.76% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 24.00%, which underperforms approximately 26.35% of global competitors.

Next Steps

Given the analysis of Incitec Pivot Ltd's dividend payments, growth rates, payout ratio, profitability, and growth metrics, investors should weigh these factors when considering the sustainability of future dividends. While the company shows a history of consistent dividend payments and a good profitability rank, the payout ratio and growth metrics present a nuanced picture that warrants careful consideration. For investors seeking high-dividend yield opportunities, GuruFocus Premium offers a High Dividend Yield Screener tool that could be instrumental in making informed investment decisions.

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.