PPL Corp's Dividend Analysis
Understanding PPL Corp's Upcoming Dividend and Financial Health
PPL Corp (NYSE:PPL) recently announced a dividend of $0.24 per share, payable on 2024-01-02, with the ex-dividend date set for 2023-12-07. 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 PPL Corp's dividend performance and assess its sustainability.
What Does PPL Corp Do?
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PPL Corp is a holding company of regulated utilities in Pennsylvania, Kentucky, and Rhode Island. The Pennsylvania regulated delivery and transmission segment distributes electricity to customers in central and eastern Pennsylvania. LG&E and KU are involved in regulated electricity generation, transmission, and distribution in Kentucky. The Kentucky utilities also serve gas customers. Narragansett operates electric and gas utilities in Rhode Island.
A Glimpse at PPL Corp's Dividend History
PPL Corp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down PPL Corp's Dividend Yield and Growth
As of today, PPL Corp currently has a 12-month trailing dividend yield of 3.61% and a 12-month forward dividend yield of 3.67%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, PPL Corp's annual dividend growth rate was -19.10%. Extended to a five-year horizon, this rate increased to -8.00% per year. And over the past decade, PPL Corp's annual dividends per share growth rate stands at -1.30%.
Based on PPL Corp's dividend yield and five-year growth rate, the 5-year yield on cost of PPL Corp stock as of today is approximately 2.38%.
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 2023-09-30, PPL Corp's dividend payout ratio is 0.91, which may suggest that the company's dividend may not be sustainable.
PPL Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks PPL Corp's profitability 7 out of 10 as of 2023-09-30, 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. PPL Corp'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 PPL Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. PPL Corp's revenue has increased by approximately 12.10% per year on average, a rate that outperforms approximately 66.74% 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, PPL Corp's earnings increased by approximately -1.20% per year on average, a rate that outperforms approximately 38.41% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -42.30%, which outperforms approximately 1.69% of global competitors.
Investing in PPL Corp's Dividend Future
Investors considering PPL Corp's stock must weigh the company's long-standing dividend history against the recent negative dividend growth rates and a high payout ratio. While PPL Corp's profitability and growth ranks indicate a solid footing in the industry, the sustainability of its dividends could be a concern if the negative trends in dividend growth and payout ratios persist. It's essential to monitor these metrics closely, alongside the company's ability to maintain profitability and revenue growth, to make an informed decision about the attractiveness of PPL Corp as a dividend investment. For those seeking dividend income, PPL Corp's upcoming payment is a short-term benefit, but the long-term outlook requires careful consideration of the company's financial health and market position.
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.
