Stryker Corp's Dividend Analysis
Understanding Stryker Corp's Dividend Sustainability and Growth
Stryker Corp (NYSE:SYK) recently announced a dividend of $0.8 per share, payable on 2024-01-31, with the ex-dividend date set for 2023-12-28. 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 Stryker Corp's dividend performance and assess its sustainability.
What Does Stryker Corp Do?
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Stryker designs, manufactures, and markets an array of medical equipment, instruments, consumable supplies, and implantable devices. The product portfolio includes hip and knee replacements, endoscopy systems, operating room equipment, embolic coils, hospital beds and gurneys, and spinal devices. Stryker remains one of the three largest competitors in reconstructive orthopedic implants and holds the leadership position in operating room equipment. Just over one fourth of Stryker's total revenue currently comes from outside the United States.
A Glimpse at Stryker Corp's Dividend History
Stryker Corp has maintained a consistent dividend payment record since 1991. Dividends are currently distributed on a quarterly basis.
Stryker Corp has increased its dividend each year since 1994. 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 29 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Stryker Corp's Dividend Yield and Growth
As of today, Stryker Corp currently has a 12-month trailing dividend yield of 1.01% and a 12-month forward dividend yield of 1.08%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Stryker Corp's annual dividend growth rate was 9.90%. Extended to a five-year horizon, this rate increased to 10.20% per year. And over the past decade, Stryker Corp's annual dividends per share growth rate stands at an impressive 11.60%.
Based on Stryker Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Stryker Corp stock as of today is approximately 1.64%.
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, Stryker Corp's dividend payout ratio is 0.45.
Stryker Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Stryker Corp's profitability 9 out of 10 as of 2023-09-30, suggesting good profitability prospects. 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. Stryker Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Stryker Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Stryker Corp's revenue has increased by approximately 7.20% per year on average, a rate that underperforms approximately 50.07% 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, Stryker Corp's earnings increased by approximately 4.20% per year on average, a rate that underperforms approximately 56.65% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.00%, which underperforms approximately 57.93% of global competitors.
Next Steps
In conclusion, Stryker Corp's consistent dividend growth and its status as a dividend aristocrat reflect a strong commitment to returning value to shareholders. The company's moderate payout ratio, combined with high profitability and a solid growth rank, suggests that its dividend is sustainable in the near term. However, investors should consider the underperformance in revenue growth and earnings growth rates relative to global competitors, which could impact the company's ability to maintain its dividend growth trajectory in the long term. As Stryker Corp continues to navigate the competitive landscape of the medical technology industry, investors should monitor these key metrics to gauge the future prospects of the company's dividends. For those seeking additional investment opportunities with attractive dividends, GuruFocus Premium users can explore the High Dividend Yield Screener for potential options.
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.
