Intertek Group PLC: A Closer Look at Its Dividend Performance and Sustainability
An in-depth analysis of the dividend history, yield, growth rate, and sustainability of Intertek Group PLC (IKTSF)
Intertek Group PLC(IKTSF) recently announced a dividend of $0.38 per share, payable on 2023-10-06, with the ex-dividend date set for 2023-09-14. 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 deep dive into Intertek Group PLCs dividend performance and assess its sustainability.
Understanding Intertek Group PLC's Business
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FTSE 100 firm Intertek is one of the largest and oldest companies in the testing, inspection, and certification industry. The company's primary activities involve testing products and materials, inspecting sites/industrial equipment, and certifying products and systems to ensure global/company standards. Intertek is one of only four TIC companies that operate globally across numerous industries. The firm listed in 2002, following a divestment by Charterhouse. It employs almost 44,000 people worldwide.
Intertek Group PLC's Dividend History
Intertek Group PLC has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Intertek Group PLC's Dividend Yield and Growth
As of today, Intertek Group PLC currently has a 12-month trailing dividend yield of 2.48% and a 12-month forward dividend yield of 2.67%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Intertek Group PLC's annual dividend growth rate was 1.40%. Extended to a five-year horizon, this rate increased to 9.60% per year. And over the past decade, Intertek Group PLC's annual dividends per share growth rate stands at an impressive 12.80%.
Based on Intertek Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Intertek Group PLC stock as of today is approximately 3.92%.
Assessing Dividend Sustainability: 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 2023-06-30, Intertek Group PLC's dividend payout ratio is 0.58.
Intertek Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Intertek Group PLC's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Projecting Future Dividend Sustainability: Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Intertek Group PLC'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 Intertek Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Intertek Group PLC's revenue has increased by approximately 2.40% per year on average, a rate that underperforms than approximately 55.95% 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, Intertek Group PLC's earnings increased by approximately -2.50% per year on average, a rate that underperforms than approximately 70.26% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -0.30%, which underperforms than approximately 70.6% of global competitors.
Conclusion: Intertek Group PLC's Dividend Sustainability
Considering Intertek Group PLC's consistent dividend payments, impressive growth rates, and good profitability, the company appears to have a sustainable dividend model. However, its underperformance in revenue and EPS growth compared to global competitors may pose a challenge. Therefore, investors should keep a close eye on these metrics and the company's future growth strategies to ensure the continued sustainability of its dividends.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
