Pearson PLC's Dividend Analysis
Assessing the Upcoming Dividend and Historical Performance of Pearson PLC
Pearson PLC (NYSE:PSO) recently announced a dividend of $0.2 per share, payable on 2024-05-08, with the ex-dividend date set for 2024-03-21. 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 Pearson PLC's dividend performance and assess its sustainability.
What Does Pearson PLC Do?
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U.K.-listed Pearson is the world's largest educational provider. The company has been disposing of noncore businesses such as the Financial Times, The Economist, and publishing house Penguin, and is now focused on being an educational resource and testing provider. While Pearson's primary activity centers on higher-level education, the firm also has significant operations in providing clinical assessments, professional certification, and testing.
A Glimpse at Pearson PLC's Dividend History
Pearson PLC has maintained a consistent dividend payment record since 1995. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Pearson PLC's Dividend Yield and Growth
As of today, Pearson PLC currently has a 12-month trailing dividend yield of 2.15% and a 12-month forward dividend yield of 2.23%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Pearson PLC's annual dividend growth rate was 3.90%. Extended to a five-year horizon, this rate increased to 4.10% per year. And over the past decade, Pearson PLC's annual dividends per share growth rate stands at -10.90%.
Based on Pearson PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Pearson PLC stock as of today is approximately 2.63%.
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, Pearson PLC's dividend payout ratio is 0.38.
Pearson PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Pearson PLC's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 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. Pearson PLC'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 Pearson PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Pearson PLC's revenue has increased by approximately 4.40% per year on average, a rate that outperforms approximately 58.33% 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, Pearson PLC's earnings increased by approximately 26.20% per year on average, a rate that outperforms approximately 68.95% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -0.20%, which outperforms approximately 38.28% of global competitors.
Next Steps
With a steady dividend history, a fair yield, and a conservative payout ratio, Pearson PLC presents itself as a potentially reliable income stock for value investors. The company's strong profitability rank and solid growth metrics further bolster confidence in the sustainability of its dividends. However, investors should always consider the broader economic context, including industry trends and company-specific factors, before making investment decisions. Will Pearson PLC continue to adapt and thrive in the evolving education sector, maintaining its commitment to shareholder returns? That remains a key question for investors to ponder. For those seeking to diversify their portfolio with dividend-paying stocks, 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.
