Penske Automotive Group Inc's Dividend Analysis
Understanding PAG's Dividend Performance and Future Prospects
Penske Automotive Group Inc (NYSE:PAG) recently announced a dividend of $0.87 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-14. 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 Penske Automotive Group Inc's dividend performance and assess its sustainability.
What Does Penske Automotive Group Inc Do?
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Penske Automotive Group operates in about 20 U.S. states and overseas. It has about 150 U.S. light-vehicle stores including in Puerto Rico as well as 189 franchised dealerships overseas, primarily in the United Kingdom. The company is the second-largest U.S.-based dealership in terms of light-vehicle revenue and sells more than 35 brands, with over 90% of retail automotive revenue coming from luxury and import names. Other services, in addition to new and used vehicles, are parts and repair and finance and insurance. The firm's Premier Truck Group owns 44 truck dealerships selling mostly Freightliner and Western Star brands, and Penske owns 20 CarShop used-vehicle stores in the U.S. and U.K. The company is based in Michigan and was called United Auto Group before changing its name in 2007.
A Glimpse at Penske Automotive Group Inc's Dividend History
Penske Automotive Group Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Penske Automotive Group Inc's Dividend Yield and Growth
As of today, Penske Automotive Group Inc currently has a 12-month trailing dividend yield of 1.79% and a 12-month forward dividend yield of 1.98%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Penske Automotive Group Inc's annual dividend growth rate was 9.40%. Extended to a five-year horizon, this rate decreased to 7.50% per year. And over the past decade, Penske Automotive Group Inc's annual dividends per share growth rate stands at an impressive 12.80%.
Based on Penske Automotive Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Penske Automotive Group Inc stock as of today is approximately 2.57%.
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, Penske Automotive Group Inc's dividend payout ratio is 0.17.
Penske Automotive Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Penske Automotive Group Inc's profitability 8 out of 10 as of 2023-12-31, 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. Penske Automotive Group 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 Penske Automotive Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Penske Automotive Group Inc's revenue has increased by approximately 10.00% per year on average, a rate that outperforms approximately 61.83% 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, Penske Automotive Group Inc's earnings increased by approximately 52.00% per year on average, a rate that outperforms approximately 85.79% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 25.90%, which outperforms approximately 86.27% of global competitors.
Next Steps for Investors
In conclusion, Penske Automotive Group Inc's consistent dividend payments, strong dividend growth rate, low payout ratio, solid profitability, and robust growth metrics paint a picture of a company that is not only committed to returning value to shareholders but also positioned well for future sustainability and growth. Investors seeking to capitalize on such financial health and shareholder-friendly policies may find PAG an attractive addition to their portfolios. As the automotive industry continues to evolve, Penske Automotive Group Inc's strategic initiatives and competitive position may offer further opportunities for growth and value creation. Will this trend of increasing dividends and financial strength continue to drive investor interest in the years to come?
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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.
