International Flavors & Fragrances Inc's Dividend Analysis
Delving into the Dividend Details of IFF
International Flavors & Fragrances Inc (NYSE:IFF) recently announced a dividend of $0.40 per share, payable on April 10, 2024, with the ex-dividend date set for March 21, 2024. 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?
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International Flavors & Fragrances Inc 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 sells 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. Dividends are currently distributed on a quarterly basis. International Flavors & Fragrances Inc has increased its dividend each year since 2001. 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 23 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 currently has a 12-month trailing dividend yield of 3.94% and a 12-month forward dividend yield of 1.91%. This suggests an expectation of decreased dividend payments over the next 12 months. Over the past three years, International Flavors & Fragrances Inc's annual dividend growth rate was 2.10%. Extended to a five-year horizon, this rate increased to 2.70% per year. And over the past decade, International Flavors & Fragrances Inc's annual dividends per share growth rate stands at 7.80%. Based on International Flavors & Fragrances Inc's dividend yield and five-year growth rate, the 5-year yield on cost of International Flavors & Fragrances Inc stock as of today is approximately 4.50%.
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 December 31, 2023, International Flavors & Fragrances Inc's dividend payout ratio is 2.08, which may suggest that the company's dividend may not be sustainable. International Flavors & Fragrances Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks International Flavors & Fragrances Inc's profitability 6 out of 10 as of December 31, 2023, suggesting fair profitability. The company has reported net profit in 8 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. International Flavors & Fragrances Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and International Flavors & Fragrances Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. International Flavors & Fragrances Inc's revenue has increased by approximately 0.30% per year on average, a rate that underperforms than approximately 77.32% 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, International Flavors & Fragrances Inc's earnings increased by approximately -33.60% per year on average, a rate that underperforms than approximately 89.98% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -45.70%, which underperforms than approximately 99.16% of global competitors.
Next Steps
Considering International Flavors & Fragrances Inc's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should weigh these factors in their investment decisions. While the company's consistent dividend history and yield on cost are attractive, the recent dip in earnings growth and EBITDA growth rate may raise concerns about the long-term sustainability of these dividends. Value investors should carefully consider the balance between the company's established track record and the signals from its growth and profitability metrics. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find opportunities that align with their investment strategy.
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.
