Sensient Technologies Corp's Dividend Analysis
A Comprehensive Examination of Sensient Technologies Corp's Dividend Performance and Sustainability
Sensient Technologies Corp (NYSE:SXT) recently announced a dividend of $0.41 per share, payable on 2023-12-01, with the ex-dividend date set for 2023-11-03. 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 delve into Sensient Technologies Corp's dividend performance and assess its sustainability.
What Does Sensient Technologies Corp Do?
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Sensient Technologies Corp manufactures and markets natural and synthetic colors, flavors, and other specialty ingredients. The company has a global network of facilities, and its customers operate across a variety of end markets. Sensient's offerings are predominantly applied to consumer-facing products, including food and beverage, cosmetics and pharmaceuticals, nutraceutical and personal care industries. The company's principal products are flavors, flavor enhancers, ingredients, extracts, and bionutrients, essential oils, dehydrated vegetables and other food ingredients, natural and synthetic food and beverage colors and others. Sensient operates through three reportable segments: the Flavors & Extracts Group, the Color Group, and the Asia Pacific Group.
A Glimpse at Sensient Technologies Corp's Dividend History
Sensient Technologies Corp has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1996, earning it the status of a dividend aristocrat, a distinction given to companies that have increased their dividend each year for at least the past 27 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Sensient Technologies Corp's Dividend Yield and Growth
As of today, Sensient Technologies Corp currently has a 12-month trailing dividend yield of 2.89% and a 12-month forward dividend yield of 2.89%, suggesting an expectation of same dividend payments over the next 12 months. Over the past three years, Sensient Technologies Corp's annual dividend growth rate was 3.70%. This rate increased to 5.80% per year over a five-year horizon, and over the past decade, the company's annual dividends per share growth rate stands at 7.20%. Based on Sensient Technologies Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Sensient Technologies Corp stock as of today is approximately 3.83%.
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, Sensient Technologies Corp's dividend payout ratio is 0.54. Sensient Technologies Corp's profitability rank of 7 out of 10 as of 2023-09-30, suggests good profitability prospects. The company has reported positive net income for each 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. Sensient Technologies Corp's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model, with revenue increasing by approximately 2.90% per year on average. However, this rate underperforms approximately 72.63% 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, Sensient Technologies Corp's earnings increased by approximately 3.60% per year on average, a rate that underperforms approximately 63.31% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -1.60% underperforms approximately 75.97% of global competitors.
Concluding Remarks
In conclusion, Sensient Technologies Corp's consistent dividend payments, steady dividend growth rate, reasonable payout ratio, and good profitability present a favorable picture for dividend-focused investors. However, its growth metrics point to some challenges, with the company's revenue and earnings growth rates underperforming a significant number of global competitors. Therefore, while the company's dividend performance is commendable, investors should keep a close eye on its growth metrics for a complete assessment of its financial health. 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.
