Sysco Corp's Dividend Analysis
Assessing the Sustainability and Growth of Sysco Corp's Dividends
Sysco Corp (NYSE:SYY) recently announced a dividend of $0.5 per share, payable on 2024-01-26, with the ex-dividend date set for 2024-01-04. 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 Sysco Corp's dividend performance and assess its sustainability.
What Does Sysco Corp Do?
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Sysco is the largest U.S. foodservice distributor with 17% share of the highly fragmented $350 billion domestic market. Sysco distributes roughly 500,000 food and nonfood products to restaurants (62% of fiscal 2023 revenue), education and government buildings (8%), travel and leisure (8%), healthcare facilities (7%) and other locations (15%) where individuals consume away-from-home meals. In fiscal 2023, 70% of the firm's revenue was derived from its U.S. foodservice operations, while its international (18%), quick-service logistics (10%), and other (2%) segments made up the difference.
A Glimpse at Sysco Corp's Dividend History
Sysco Corp has maintained a consistent dividend payment record since 1971. Dividends are currently distributed on a quarterly basis. Sysco Corp has increased its dividend each year since 1971. 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 53 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Sysco Corp's Dividend Yield and Growth
As of today, Sysco Corp currently has a 12-month trailing dividend yield of 2.67% and a 12-month forward dividend yield of 2.69%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Sysco Corp's annual dividend growth rate was 4.20%. Extended to a five-year horizon, this rate increased to 7.00% per year. And over the past decade, Sysco Corp's annual dividends per share growth rate stands at 6.60%.
Based on Sysco Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Sysco Corp stock as of today is approximately 3.74%.
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, Sysco Corp's dividend payout ratio is 0.56.
Sysco Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sysco Corp's profitability 8 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. Sysco Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Sysco Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sysco Corp's revenue has increased by approximately 13.30% per year on average, a rate that outperforms approximately 76.76% 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, Sysco Corp's earnings increased by approximately 25.90% per year on average, a rate that outperforms approximately 72.65% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.80%, which outperforms approximately 28.9% of global competitors.
Next Steps
Investors considering Sysco Corp (NYSE:SYY) for their portfolio can be encouraged by the company's strong dividend history and growth, a reasonable payout ratio, and solid profitability and growth metrics. These factors combined suggest that Sysco Corp is not only committed to returning value to shareholders through dividends but is also well-positioned to continue doing so in the future. As value investors, assessing these indicators is crucial for making informed decisions about the long-term viability of a stock's dividend. For those seeking additional high-dividend yield investment opportunities, GuruFocus Premium users can leverage 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.
