Lancaster Colony Corp's Dividend Analysis
Understanding the Dividend Outlook for Lancaster Colony Corp
Lancaster Colony Corp (NASDAQ:LANC) recently announced a dividend of $0.9 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 Lancaster Colony Corp's dividend performance and assess its sustainability.
What Does Lancaster Colony Corp Do?
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Lancaster Colony Corp is a manufacturer and marketer of specialty food products. The company's segments include Retail and Foodservice. By product segment, the company divides its portfolio into non-frozen (roughly 70% of net sales) and frozen food. The key products and brands are salad dressing and sauces (Cardini's, Girard's, Marzetti), frozen garlic breads (New York Brand Bakery, Mamma Bella), vegetable dips and fruit dips (Marzetti), frozen parkerhouse-style yeast rolls and dinner rolls (Sister Schubert's, Mary B's), premium dry egg noodles (Amish Kitchen), frozen specialty noodles (Reames, Aunt Vi's), croutons and salad toppings, flatbread wraps, and pizza crusts.
A Glimpse at Lancaster Colony Corp's Dividend History
Lancaster Colony Corp has maintained a consistent dividend payment record since 1963. Dividends are currently distributed on a quarterly basis. Lancaster Colony Corp has increased its dividend each year since 1963. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 60 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Lancaster Colony Corp's Dividend Yield and Growth
As of today, Lancaster Colony Corp currently has a 12-month trailing dividend yield of 2.06% and a 12-month forward dividend yield of 2.17%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Lancaster Colony Corp's annual dividend growth rate was 6.80%. Extended to a five-year horizon, this rate increased to 7.30% per year. And over the past decade, Lancaster Colony Corp's annual dividends per share growth rate stands at 8.20%. Based on Lancaster Colony Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Lancaster Colony Corp stock as of today is approximately 2.93%.
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, Lancaster Colony Corp's dividend payout ratio is 0.80, which may suggest that the company's dividend may not be sustainable.
Lancaster Colony Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lancaster Colony Corp's profitability 9 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of 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. Lancaster Colony Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Lancaster Colony Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lancaster Colony Corp's revenue has increased by approximately 11.00% per year on average, a rate that outperforms approximately 64.65% 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, Lancaster Colony Corp's earnings increased by approximately -1.70% per year on average, a rate that outperforms approximately 39.18% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -2.30%, which outperforms approximately 31.69% of global competitors.
Conclusion: Evaluating Lancaster Colony Corp's Dividend Prospects
In conclusion, while Lancaster Colony Corp's dividend history as a dividend king is impressive, investors must consider the current payout ratio and the company's profitability and growth prospects when evaluating the sustainability of future dividends. With a solid profitability rank and promising growth metrics, Lancaster Colony Corp appears to be on a path that could support ongoing dividend payments. However, the payout ratio indicates a need for careful monitoring. Investors should keep an eye on the company's financial health and market position as they consider the stock for their dividend portfolios. 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.
