Sonoco Products Co's Dividend Analysis
Understanding the Dividend Prospects of Sonoco Products Co
Sonoco Products Co (NYSE:SON) recently announced a dividend of $0.51 per share, payable on 2024-03-08, with the ex-dividend date set for 2024-02-27. 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 Sonoco Products Co's dividend performance and assess its sustainability.
What Does Sonoco Products Co Do?
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Over its 100-year-plus history, Sonoco Products has steadily assembled a diverse portfolio of industrial and consumer packaging product offerings such as flexible and rigid plastics, reels and spools, pallets, and composite cans. The company serves a variety of consumer and industrial end markets throughout North America. Sonoco has raised its dividend each year for more than 30 years.
A Glimpse at Sonoco Products Co's Dividend History
Sonoco Products Co has maintained a consistent dividend payment record since 1981. Dividends are currently distributed on a quarterly basis.
Sonoco Products Co has increased its dividend each year since 1981. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 43 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Sonoco Products Co's Dividend Yield and Growth
As of today, Sonoco Products Co currently has a 12-month trailing dividend yield of 3.52% and a 12-month forward dividend yield of 3.55%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Sonoco Products Co's annual dividend growth rate was 5.50%. Extended to a five-year horizon, this rate decreased to 4.40% per year. And over the past decade, Sonoco Products Co's annual dividends per share growth rate stands at 5.00%.
Based on Sonoco Products Co's dividend yield and five-year growth rate, the 5-year yield on cost of Sonoco Products Co stock as of today is approximately 4.37%.
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 2023-12-31, Sonoco Products Co's dividend payout ratio is 0.38.
Sonoco Products Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sonoco Products Co's profitability 7 out of 10 as of 2023-12-31, 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. Sonoco Products Co'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 Sonoco Products Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sonoco Products Co's revenue has increased by approximately 9.80% per year on average, a rate that outperforms approximately 62.19% 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, Sonoco Products Co's earnings increased by approximately 15.50% per year on average, a rate that outperforms approximately 61.78% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.70%, which outperforms approximately 64.22% of global competitors.
Next Steps for Investors
Considering Sonoco Products Co's consistent dividend growth, reasonable payout ratio, and solid profitability and growth metrics, the company stands as a potentially attractive option for value investors focused on dividend income. However, it is crucial to monitor these factors regularly to ensure the dividends' sustainability. Investors should also consider the broader market conditions and individual investment goals when making decisions. With a history of over 30 years of dividend increases, Sonoco Products Co may continue to be a reliable component in a dividend-focused 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.
