NetApp Inc's Dividend Analysis
Unpacking the Upcoming Dividend Payment and Historical Performance
NetApp Inc(NASDAQ:NTAP) recently announced a dividend of $0.5 per share, payable on 2024-01-24, with the ex-dividend date set for 2024-01-04. 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 NetApp Inc's dividend performance and assess its sustainability.
What Does NetApp Inc Do?
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NetApp Inc is a leading provider of enterprise data management and storage solutions. The company's segments include Hybrid Cloud and Public Cloud. It generates maximum revenue from the Hybrid Cloud segment. The Hybrid Cloud segment offers a portfolio of storage management and infrastructure solutions that help customers recast their traditional data centers with the power of cloud. This portfolio is designed to operate with public clouds to unlock the potential of hybrid, multi-cloud operations. Hybrid Cloud is composed of software, hardware, and related support, as well as professional and other services.
A Glimpse at NetApp Inc's Dividend History
NetApp Inc has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis.
NetApp Inc has increased its dividend each year since 2014. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down NetApp Inc's Dividend Yield and Growth
As of today, NetApp Inc currently has a 12-month trailing dividend yield of 2.31% and a 12-month forward dividend yield of 2.31%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, NetApp Inc's annual dividend growth rate was 1.40%. Extended to a five-year horizon, this rate increased to 16.20% per year.
Based on NetApp Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NetApp Inc stock as of today is approximately 4.89%.
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 2023-10-31, NetApp Inc's dividend payout ratio is 0.62.
NetApp Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NetApp Inc's profitability 8 out of 10 as of 2023-10-31, 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. NetApp Inc's growth rank of 8 out of 10 suggests that the company 's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and NetApp Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NetApp Inc's revenue has increased by approximately 7.60% per year on average, a rate that outperforms than approximately 58.9% 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, NetApp Inc's earnings increased by approximately 22.10% per year on average, a rate that outperforms than approximately 61.72% of global competitors.
Concluding Thoughts on NetApp Inc's Dividend Profile
NetApp Inc's consistent dividend payments, growth in dividend per share, and a reasonable payout ratio paint a picture of a company committed to returning value to its shareholders. The company's strong profitability and robust growth metrics further support the sustainability of its dividends. For value investors seeking companies with a reliable dividend history and potential for continued growth, NetApp Inc presents a compelling case. With the next dividend payment on the horizon, investors have an opportunity to evaluate how this aspect of shareholder return fits into their investment 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.
