International Flavors & Fragrances Inc's Dividend Analysis
Assessing the Sustainability of IFF's Upcoming Dividend
International Flavors & Fragrances Inc (NYSE:IFF) recently announced a dividend of $0.81 per share, payable on 2024-01-08, with the ex-dividend date set for 2023-12-27. 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 International Flavors & Fragrances Inc's dividend performance and assess its sustainability.
What Does International Flavors & Fragrances Inc Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
International Flavors & Fragrances is the largest specialty ingredients producer globally. The company sells ingredients for the food, beverage, health, household goods, personal care, and pharmaceutical industries. The company makes proprietary formulations, partnering with customers to deliver custom solutions. The nourish segment, which generates roughly half of revenue, is a leading flavor producer and also sell texturants, plant-based proteins, and other ingredients. The health and biosciences business, which generates around one fourth of revenue, is a global leader in probiotics and enzymes. IFF is also one of the leading fragrance producers in the world. The firm also sells pharmaceutical ingredients such as excipients and time-release polymers.
A Glimpse at International Flavors & Fragrances Inc's Dividend History
International Flavors & Fragrances Inc has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2001, earning the status of a dividend achiever. This distinction is reserved for companies that have a track record of increasing their dividends annually for at least the past 22 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down International Flavors & Fragrances Inc's Dividend Yield and Growth
As of today, International Flavors & Fragrances Inc boasts a 12-month trailing dividend yield and a forward dividend yield, both at 4.01%. This indicates an expectation of consistent dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 2.60%, which rose to 3.60% over a five-year period. Over the past decade, the annual dividends per share growth rate has been an impressive 9.70%. Consequently, the 5-year yield on cost for International Flavors & Fragrances Inc stock is approximately 4.79%.
The Sustainability Question: Payout Ratio and Profitability
Investigating the sustainability of the dividend requires a look at the company's payout ratio. International Flavors & Fragrances Inc's dividend payout ratio, which is the portion of earnings distributed as dividends, stands at 54.00 as of 2023-09-30. This may suggest concerns about the dividend's sustainability. However, the company's profitability rank provides a more optimistic perspective. With a rank of 7 out of 10, International Flavors & Fragrances Inc demonstrates good profitability prospects, reporting net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must exhibit strong growth metrics. International Flavors & Fragrances Inc's growth rank of 7 out of 10 signals a positive growth trajectory. However, the company's revenue growth rate of 2.40% per year, which underperforms approximately 73.55% of global competitors, raises concerns. Similarly, the 3-year EPS growth rate shows a decline, underperforming approximately 98.33% of global competitors. The 5-year EBITDA growth rate also lags, underperforming about 99.48% of global competitors. These indicators suggest that while the company has a solid history, its future growth prospects may be challenging.
Next Steps
In conclusion, while International Flavors & Fragrances Inc's dividend history and current yield are appealing, investors should cautiously consider the company's payout ratio, profitability, and growth metrics. The mixed signals from these financial indicators necessitate a thorough evaluation of International Flavors & Fragrances Inc's long-term dividend sustainability. For those seeking high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to discover potential investment opportunities.
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.
