McGrath RentCorp's Dividend Analysis
Assessing the Sustainability and Future Prospects of McGrath RentCorp's Dividend
McGrath RentCorp (NASDAQ:MGRC) recently announced a dividend of $0.47 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-16. 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 McGrath RentCorp's dividend performance and assess its sustainability.
What Does McGrath RentCorp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
McGrath RentCorp is a business-to-business rental company, operating across four reportable business segments: Mobile Modular, TRS-RenTelco, Adler Tanks, and Enviroplex. The company's primary revenue comes from the rental of its equipment on operating leases, with equipment sales occurring in the normal course of business.
A Glimpse at McGrath RentCorp's Dividend History
McGrath RentCorp has maintained a consistent dividend payment record since 1990, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1990, making it a recognized dividend aristocrat.
Breaking Down McGrath RentCorp's Dividend Yield and Growth
McGrath RentCorp currently has a 12-month trailing dividend yield of 1.79% and a 12-month forward dividend yield of 1.81%. This indicates an expectation of increased dividend payments over the next 12 months.
Over the past three years, McGrath RentCorp's annual dividend growth rate was 7.10%, which increases to 11.40% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 7.70%.
Based on McGrath RentCorp's dividend yield and five-year growth rate, the 5-year yield on cost of McGrath RentCorp stock as of today is approximately 3.07%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio of McGrath RentCorp, which stands at 0.40 as of 2023-06-30, suggests the company retains a significant part of its earnings, ensuring funds for future growth and unexpected downturns. McGrath RentCorp's profitability rank is 9 out of 10, indicating strong 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
McGrath RentCorp's growth rank of 9 out of 10 suggests a promising growth trajectory. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. McGrath RentCorp's revenue has increased by approximately 8.90% per year on average, outperforming approximately 63.35% 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, McGrath RentCorp's earnings increased by approximately 6.10% per year on average, a rate that outperforms approximately 41.91% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -3.00% outperforms approximately 23.43% of global competitors.
Conclusion
In conclusion, McGrath RentCorp's consistent dividend payments, robust dividend growth rate, and sustainable payout ratio, coupled with its strong profitability and growth metrics, suggest that the company's dividends are likely to be sustainable in the long run. Therefore, McGrath RentCorp presents a compelling case for value investors seeking steady dividend income.
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.
