Lendlease Group's Dividend Analysis
Assessing the Sustainability of Lendlease Group's Upcoming Dividend
Lendlease Group (LLESF) recently announced a dividend of $0.07 per share, payable on 2024-03-13, with the ex-dividend date set for 2024-02-23. 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 Lendlease Group's dividend performance and assess its sustainability.
What Does Lendlease Group Do?
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Lendlease's business comprises three segments: development, investments, and construction. Development accounted for more than half of EBITDA in 2020, and the future pipeline is so large it cannot be funded from its own balance sheet. The group is selling stakes in mature projects to its funds management clients. This sacrifices development profit, in return for management fees, reduced risk, and capital to accelerate new projects in the pipeline. Construction generates large revenues but slim margins. This business is retained to preserve expertise and scale for the development business. Lendlease sold its engineering and services business during the pandemic, but retains some risks, notably the Melbourne Metro project. It is also reducing its exposure to retirement living.
A Glimpse at Lendlease Group's Dividend History
Lendlease Group has maintained a consistent dividend payment record since 2020. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Lendlease Group's Dividend Yield and Growth
As of today, Lendlease Group currently has a 12-month trailing dividend yield of 2.25% and a 12-month forward dividend yield of 2.46%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Lendlease Group's annual dividend growth rate was -35.80%. Extended to a five-year horizon, this rate increased to -27.90% per year. And over the past decade, Lendlease Group's annual dividends per share growth rate stands at -11.30%.
Based on Lendlease Group's dividend yield and five-year growth rate, the 5-year yield on cost of Lendlease Group stock as of today is approximately 0.44%.
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 2023-06-30, Lendlease Group's dividend payout ratio is 0.00.
Lendlease Group's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lendlease Group's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported net profit in 7 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. Lendlease Group's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.
Revenue is the lifeblood of any company, and Lendlease Group's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lendlease Group's revenue has increased by approximately -8.40% per year on average, a rate that underperforms approximately 72.67% 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, Lendlease Group's earnings increased by approximately 16.10% per year on average, a rate that underperforms approximately 31.97% of global competitors.
Next Steps for Investors
In conclusion, while Lendlease Group's recent dividend announcement is a positive sign for income-seeking investors, the company's declining dividend growth rate, low payout ratio, and middling profitability and growth ranks paint a mixed picture of its dividend sustainability. Investors should weigh these factors carefully and monitor the company's future earnings reports and strategic decisions. For those looking to explore additional investment opportunities, 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.
