ResMed Inc's Dividend Analysis
Assessing the Sustainability and Growth of ResMed Inc's Dividend
ResMed Inc(NYSE:RMD) recently announced a dividend of $0.48 per share, payable on 2023-12-14, with the ex-dividend date set for 2023-11-08. 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 ResMed Inc's dividend performance and assess its sustainability.
What Does ResMed Inc Do?
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ResMed is one of the largest respiratory care device companies globally, primarily developing and supplying flow generators, masks and accessories for the treatment of sleep apnea. Increasing diagnosis of sleep apnea combined with ageing populations and increasing prevalence of obesity is resulting in a structurally growing market. The company earns roughly two thirds of its revenue in the Americas and the balance across other regions dominated by Europe, Japan and Australia. Recent developments and acquisitions have focused on digital health as ResMed is aiming to differentiate itself through the provision of clinical data for use by the patient, medical care advisor and payer in the out-of-hospital setting.
A Glimpse at ResMed Inc's Dividend History
ResMed Inc has maintained a consistent dividend payment record since 2012. Dividends are currently distributed on a quarterly basis. ResMed Inc has increased its dividend each year since 2013. 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 ResMed Inc's Dividend Yield and Growth
As of today, ResMed Inc currently has a 12-month trailing dividend yield of 1.16% and a 12-month forward dividend yield of 1.24%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, ResMed Inc's annual dividend growth rate was 4.10%. Extended to a five-year horizon, this rate increased to 4.50% per year. And over the past decade, ResMed Inc's annual dividends per share growth rate stands at 8.00%.
Based on ResMed Inc's dividend yield and five-year growth rate, the 5-year yield on cost of ResMed Inc stock as of today is approximately 1.45%.
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, ResMed Inc's dividend payout ratio is 0.29.
ResMed Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ResMed Inc's profitability 10 out of 10 as of 2023-09-30, 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. ResMed 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 ResMed Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. ResMed Inc's revenue has increased by approximately 12.20% per year on average, a rate that outperforms than approximately 63.17% 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, ResMed Inc's earnings increased by approximately 14.70% per year on average, a rate that outperforms than approximately 56.63% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 23.00%, which outperforms than approximately 71.08% of global competitors.
Next Steps
In conclusion, ResMed Inc's consistent dividend payments, robust growth rate, low payout ratio, and high profitability suggest a sustainable and growing dividend. The company's strong growth metrics indicate a promising future, potentially leading to further increases in dividend payments. Therefore, investors seeking steady dividend income might want to consider ResMed Inc for their portfolio. 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.
