Innospec Inc's Dividend Analysis
Assessing the Sustainability of Innospec Inc's Upcoming Dividend
Innospec Inc (NASDAQ:IOSP) recently announced a dividend of $0.72 per share, payable on 2023-11-27, with the ex-dividend date set for 2023-11-17. 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 Innospec Inc's dividend performance and assess its sustainability.
What Does Innospec Inc Do?
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Innospec Inc manufactures and sells a variety of chemicals and fuel additives. The firm organizes itself into three segments based on product type. The fuel specialties segment, which generates the majority of revenue, sells products used to improve fuel efficiency, boost engine performance, and reduce emissions for automobiles, boats, and airplanes. It also sells products used by oil field services providers in the extraction of oil and gas. The performance chemicals segment sells products to the personal-care industry. The Oilfield Services segment develops and markets products to prevent loss of mud.
A Glimpse at Innospec Inc's Dividend History
Innospec Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a bi-annually basis. Innospec Inc has increased its dividend each year since 2013. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Innospec Inc's Dividend Yield and Growth
As of today, Innospec Inc currently has a 12-month trailing dividend yield of 1.24% and a 12-month forward dividend yield of 1.33%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Innospec Inc's annual dividend growth rate was 7.90%. Extended to a five-year horizon, this rate increased to 10.10% per year. Based on Innospec Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Innospec Inc stock as of today is approximately 2.01%.
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, Innospec Inc's dividend payout ratio is 0.26.
Innospec Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Innospec Inc'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. Innospec Inc'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 Innospec Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Innospec Inc's revenue has increased by approximately 8.70% per year on average, a rate that underperforms approximately 52.86% 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, Innospec Inc's earnings increased by approximately 6.20% per year on average, a rate that underperforms approximately 57.74% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 9.50%, which underperforms approximately 48.91% of global competitors.
Next Steps for Investors
Considering Innospec Inc's consistent dividend payments, its status as a dividend achiever, and a reasonable payout ratio, the company presents an attractive option for investors seeking regular income. The profitability and growth metrics, while mixed in comparison to global competitors, show a company capable of sustaining its dividend in the foreseeable future. Investors should also consider the overall market conditions and Innospec Inc's strategic position within its industry when evaluating its long-term dividend prospects. 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.
