Lenovo Group Ltd's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance
Lenovo Group Ltd (LNVGY) recently announced a dividend of $0.21 per share, payable on 2023-12-20, with the ex-dividend date set for 2023-11-28. 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 Lenovo Group Ltd's dividend performance and assess its sustainability.
What Does Lenovo Group Ltd Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Lenovo Group Ltd is a global technology hardware company with a leading market share in personal computers. Its operations are divided into three main business segments: PC and smart devices, mobile, and data center, which we expect to account for 55%, 11%, and 19% of sales in the midterm, respectively. The firm has been actively growing its data center business, which primarily sells network servers to enterprise and hyperscale customers, as well as storage equipment through its mainland China joint venture with NetApp. Server-related revenue contribution has jumped to 16% of overall sales in fiscal 2022, from 6% in 2015.
A Glimpse at Lenovo Group Ltd's Dividend History
Lenovo Group Ltd has maintained a consistent dividend payment record since 2000. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Lenovo Group Ltd's Dividend Yield and Growth
As of today, Lenovo Group Ltd currently has a 12-month trailing dividend yield of 3.97% and a 12-month forward dividend yield of 3.97%. This suggests an expectation of the same dividend payments over the next 12 months.
Over the past three years, Lenovo Group Ltd's annual dividend growth rate was 10.80%. Extended to a five-year horizon, this rate decreased to 7.00% per year. And over the past decade, Lenovo Group Ltd's annual dividends per share growth rate stands at 6.90%.
Based on Lenovo Group Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Lenovo Group Ltd stock as of today is approximately 5.57%.
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, Lenovo Group Ltd's dividend payout ratio is 0.61.
Lenovo Group Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lenovo Group Ltd's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. 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. Lenovo Group Ltd'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 Lenovo Group Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lenovo Group Ltd's revenue has increased by approximately 7.00% per year on average, a rate that outperforms approximately 57.55% 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, Lenovo Group Ltd's earnings increased by approximately 33.00% per year on average, a rate that outperforms approximately 73.03% of global competitors.
Concluding Thoughts on Lenovo Group Ltd's Dividend Prospects
Considering Lenovo Group Ltd's consistent dividend payments, a commendable growth in dividend rates, and a reasonable payout ratio, the company stands out as a potentially sustainable dividend payer. The profitability and growth metrics further bolster confidence in the company's ability to maintain or possibly increase its dividend payouts in the future. Investors seeking dividend income, as well as those looking for a blend of income and growth, might find Lenovo Group Ltd an attractive option. As we anticipate the upcoming dividend payment, it's worth noting Lenovo Group Ltd's ability to adapt and thrive in the dynamic tech industry, which may continue to support its dividend strategy.
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.
