NetEase Inc's Dividend Analysis
Assessing the Sustainability and Growth of NetEase Inc's Dividends
NetEase Inc(NASDAQ:NTES) recently announced a dividend of $1.08 per share, payable on 2024-03-28, with the ex-dividend date set for 2024-03-13. 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 NetEase Inc's dividend performance and assess its sustainability.
What Does NetEase Inc Do?
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NetEase, which started as an internet portal service in 1997, is a leading online services provider in China. Its key services include online/mobile games, cloud music, media, advertising, email, live streaming, online education, and e-commerce. The company develops and operates some of China's most popular PC client and mobile games, and it partners with global leading game developers, such as Blizzard Entertainment and Mojang (a Microsoft subsidiary).
A Glimpse at NetEase Inc's Dividend History
NetEase Inc has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down NetEase Inc's Dividend Yield and Growth
As of today, NetEase Inc currently has a 12-month trailing dividend yield of 1.65% and a 12-month forward dividend yield of 2.38%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, NetEase Inc's annual dividend growth rate was 21.50%. Extended to a five-year horizon, this rate increased to 28.40% per year. Based on NetEase Inc's dividend yield and five-year growth rate, the 5-year yield on cost of NetEase Inc stock as of today is approximately 5.76%.
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 2023-12-31, NetEase Inc's dividend payout ratio is 0.26.
NetEase Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks NetEase Inc's profitability 10 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each 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. NetEase Inc's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and NetEase Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. NetEase Inc's revenue has increased by approximately 9.80% per year on average, a rate that outperforms approximately 52.53% 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, NetEase Inc's earnings increased by approximately 32.40% per year on average, a rate that outperforms approximately 75.13% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 25.60%, which outperforms approximately 63.59% of global competitors.
Next Steps
In conclusion, NetEase Inc's upcoming dividend payment, along with its history of dividend growth, suggests a commitment to returning value to shareholders. The company's low payout ratio and high profitability rank underscore the sustainability of its dividends. Moreover, strong growth metrics, such as revenue per share and EPS growth, indicate a solid foundation for future dividend increases. With these factors in mind, investors may find NetEase Inc an attractive option for those seeking steady income with the potential for growth. For those looking to explore further, 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.
