Lufax Holding Ltd's Dividend Analysis
An Examination of the Dividend Performance and Sustainability of Lufax Holding Ltd
Lufax Holding Ltd (NYSE:LU) recently announced a dividend of $0.04 per share, payable on October 30, 2023, with the ex-dividend date set for October 11, 2023. 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 delve into Lufax Holding Ltd's dividend performance and assess its sustainability.
What Does Lufax Holding Ltd Do?
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Lufax Holding Ltd is a technology-empowered personal financial services platform in China. The company addresses the substantial unmet demand for personal lending among small business owners and salaried workers in China and provides tailor-made wealth management solutions to China's middle class and affluent population. Its platform has two hubs, namely the Retail Credit Facilitation Hub and the Wealth Management Hub.
A Glimpse at Lufax Holding Ltd's Dividend History
Lufax Holding Ltd has maintained a consistent dividend payment record since 2022, with dividends currently distributed bi-annually. The company has increased its dividend each year since its inception, earning it the title of a dividend king, an honor bestowed upon companies that have increased their dividend each year for at least the past 50 years. Below is a chart showing the annual Dividends Per Share for tracking historical trends.
Breaking Down Lufax Holding Ltd's Dividend Yield and Growth
As of today, Lufax Holding Ltd currently has a 12-month trailing dividend yield of 19.49% and a 12-month forward dividend yield of 7.85%. This suggests an expectation of decreased dividend payments over the next 12 months. Based on Lufax Holding Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Lufax Holding Ltd stock as of today is approximately 19.49%.
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 June 30, 2023, Lufax Holding Ltd's dividend payout ratio is 1.69, suggesting that the company's dividend may not be sustainable.
Lufax Holding Ltd's profitability rank, as determined by GuruFocus, is 5 out of 10, indicating fair profitability. The company has reported net profit in 6 out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Lufax Holding Ltd's growth rank of 5 out of 10 suggests a fair growth outlook. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with an average increase of approximately 5.20% per year, outperforming approximately 52.94% 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, Lufax Holding Ltd's earnings increased by approximately -14.70% per year on average, a rate that outperforms approximately 17.09% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 5.30% outperforms approximately 41.48% of global competitors.
Next Steps
In conclusion, Lufax Holding Ltd's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics all play a significant role in assessing the sustainability of its dividends. While the company's high payout ratio raises concerns about the sustainability of its dividends, its fair profitability and growth outlook provide some reassurance. However, investors should keep a close watch on these factors to make informed decisions. 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.
