SJW Group's Dividend Analysis
Exploring the Sustainability and Growth of SJW Group's Dividends
SJW Group (NYSE:SJW) recently announced a dividend of $0.4 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-02. 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 SJW Group's dividend performance and assess its sustainability.
What Does SJW Group Do?
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SJW Group is a U.S. water utility services holding company that provides, stores, purifies, and distributes water. The company primarily operates in various California municipalities and also has operations in other states. Its operating segments include Water Utility Services and Real Estate Services. The majority of the company's revenue is derived from its water utility services segment.
A Glimpse at SJW Group's Dividend History
SJW Group has maintained a consistent dividend payment record since 1969. Dividends are currently distributed on a quarterly basis.
SJW Group has increased its dividend each year since 1969. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 55 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down SJW Group's Dividend Yield and Growth
As of today, SJW Group currently has a 12-month trailing dividend yield of 2.53% and a 12-month forward dividend yield of 2.57%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, SJW Group's annual dividend growth rate was 6.30%. Extended to a five-year horizon, this rate increased to 9.50% per year. And over the past decade, SJW Group's annual dividends per share growth rate stands at 8.30%.
Based on SJW Group's dividend yield and five-year growth rate, the 5-year yield on cost of SJW Group stock as of today is approximately 3.98%.
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, SJW Group's dividend payout ratio is 0.48.
SJW Group's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks SJW Group's profitability 7 out of 10 as of 2023-09-30, suggesting 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. SJW Group'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 SJW Group's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. SJW Group's revenue has increased by approximately 11.50% per year on average, a rate that outperforms approximately 64.74% 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, SJW Group's earnings increased by approximately 23.10% per year on average, a rate that outperforms approximately 79.59% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.60%, which outperforms approximately 30.4% of global competitors.
Next Steps
Considering SJW Group's strong dividend track record, consistent growth in dividend payments, and a healthy payout ratio, the company's dividend appears sustainable. With a solid profitability rank and positive growth metrics, SJW Group is well-positioned to continue its legacy as a dividend king. Investors seeking to capitalize on SJW Group's dividend performance and growth prospects can find value in keeping a close eye on this stock. Will SJW Group continue to provide a stable source of income for dividend-seeking investors? This is a question that merits attention as the company progresses.
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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.
