Roche Holding AG's Dividend Analysis
Assessing the Sustainability of Roche Holding AG's Dividend Payments
Roche Holding AG (RHHBY) recently announced a dividend of $1.39 per share, payable on an unspecified future date, with the ex-dividend date set for 2024-03-14. 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 Roche Holding AG's dividend performance and assess its sustainability.
Understanding Roche Holding AG's Business
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Roche is a Swiss biopharmaceutical and diagnostic company. The firm's bestselling pharmaceutical products include a variety of oncology therapies from acquired partner Genentech, and its diagnostics group was bolstered by the acquisition of Ventana in 2008. Oncology products account for 50% of pharmaceutical sales, and centralized and point-of-care diagnostics for more than half of diagnostic-related sales.
Roche Holding AG's Dividend History
Roche Holding AG has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth of Roche Holding AG
As of today, Roche Holding AG currently has a 12-month trailing dividend yield of 3.66% and a 12-month forward dividend yield of 3.96%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Roche Holding AG's annual dividend growth rate was 1.80%. Extended to a five-year horizon, this rate increased to 2.60% per year. And over the past decade, Roche Holding AG's annual dividends per share growth rate stands at 2.40%.
Based on Roche Holding AG's dividend yield and five-year growth rate, the 5-year yield on cost of Roche Holding AG stock as of today is approximately 4.16%.
Evaluating Dividend Sustainability
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, Roche Holding AG's dividend payout ratio is 0.49.
Roche Holding AG's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Roche Holding AG's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of the past decade, further solidifying its high profitability.
Growth Metrics and Future Prospects
To ensure the sustainability of dividends, a company must have robust growth metrics. Roche Holding AG's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Roche Holding AG's revenue has increased by approximately 3.70% per year on average, a rate that underperforms approximately 59.41% 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, Roche Holding AG's earnings increased by approximately -1.00% per year on average, a rate that underperforms approximately 67.51% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 0.50%, which underperforms approximately 69.02% of global competitors.
Concluding Thoughts on Roche Holding AG's Dividends
Despite some challenges in growth metrics, Roche Holding AG's solid dividend history, reasonable payout ratio, and strong profitability rank position it as a potentially attractive option for dividend-seeking investors. The company's commitment to returning value to shareholders through consistent dividends is a testament to its financial health and strategic focus. As investors consider Roche Holding AG for their portfolios, they should weigh the dividend performance against the backdrop of the company's overall financial stability and growth potential. Will Roche Holding AG continue to uphold its dividend aristocrat status in the coming years? Analyzing these factors may provide the answer.
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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.
