State Street Corporation's Dividend Analysis
A Comprehensive Review of State Street Corporation's Upcoming Dividend Payment
State Street Corporation (NYSE:STT) recently announced a dividend of $0.69 per share, payable on 2024-04-11, with the ex-dividend date set for 2024-03-28. 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 State Street Corporation's dividend performance and assess its sustainability.
What Does State Street Corporation Do?
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State Street is a leading provider of financial services, including investment servicing, investment management, and investment research and trading. With approximately $42 trillion in assets under custody and administration and $4.1 trillion assets under management as of Dec. 31, 2023, State Street operates globally in more than 100 geographic markets and employs more than 46,000 worldwide.
A Glimpse at State Street Corporation's Dividend History
State Street Corporation has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis.
State Street Corporation has increased its dividend each year since 2009. 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 15 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down State Street Corporation's Dividend Yield and Growth
As of today, State Street Corporation currently has a 12-month trailing dividend yield of 3.45% and a 12-month forward dividend yield of 3.61%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, State Street Corporation's annual dividend growth rate was 8.30%. Extended to a five-year horizon, this rate decreased to 7.70% per year. And over the past decade, State Street Corporation's annual dividends per share growth rate stands at 9.50%.
Based on State Street Corporation's dividend yield and five-year growth rate, the 5-year yield on cost of State Street Corporation stock as of today is approximately 5.00%.
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, State Street Corporation's dividend payout ratio is 0.34.
State Street Corporation's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks State Street Corporation's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. 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. State Street Corporation's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and State Street Corporation's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. State Street Corporation's revenue has increased by approximately 3.80% per year on average, a rate that underperforms approximately 56.31% 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, State Street Corporation's earnings increased by approximately 4.40% per year on average, a rate that underperforms approximately 56.01% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.40%, which underperforms approximately 55.84% of global competitors.
Concluding Thoughts on State Street Corporation's Dividend Profile
In conclusion, State Street Corporation's upcoming dividend payment, consistent dividend growth, moderate payout ratio, and fair profitability present a balanced view for value investors. While the company's growth metrics may not be leading the industry, they support a cautious optimism for the sustainability of future dividends. Investors should weigh these factors alongside their investment strategy and consider how State Street Corporation fits into their portfolio. With the aid of tools like GuruFocus Premium's High Dividend Yield Screener, investors can further explore dividend-paying stocks to find those that align with their financial goals.
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.
