TIM SA's Dividend Analysis
Assessing the Sustainability and Growth of TIM SA's Dividend
TIM SA(NYSE:TIMB) recently announced a dividend of $0.28 per share, payable on 2024-01-31, with the ex-dividend date set for 2023-12-22. 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 TIM SA's dividend performance and assess its sustainability.
What Does TIM SA Do?
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TIM, which is 67%-owned by Telecom Italia, is the third largest wireless carrier in Brazil, with 61 million subscribers, equal to about 24% of the market. The firm also owns 49% of I-Systems, an infrastructure partnership that is expanding its network footprint across Brazil. I-Systems can provide broadband service to about 9 million locations, equal to a bit less than 15% of the country. TIM leases capacity on the venture's network to serve retail broadband customers under the UltraFibra brand.
A Glimpse at TIM SA's Dividend History
TIM SA has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down TIM SA's Dividend Yield and Growth
As of today, TIM SA currently has a 12-month trailing dividend yield of 3.52% and a 12-month forward dividend yield of 3.66%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, TIM SA's annual dividend growth rate was 23.20%. Extended to a five-year horizon, this rate increased to 29.50% per year. And over the past decade, TIM SA's annual dividends per share growth rate stands at an impressive 14.80%.
Based on TIM SA's dividend yield and five-year growth rate, the 5-year yield on cost of TIM SA stock as of today is approximately 12.82%.
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, TIM SA's dividend payout ratio is 0.88, which may suggest that the company's dividend may not be sustainable.
TIM SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks TIM SA's profitability 7 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. TIM SA'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 TIM SA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. TIM SA's revenue has increased by approximately 7.40% per year on average, outperforming approximately 67.9% 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, TIM SA's earnings increased by approximately -26.30% per year on average, outperforming approximately 11.61% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -1.90%, outperforms approximately 32.08% of global competitors.
Next Steps
In conclusion, while TIM SA's recent dividend announcement is a positive signal for income-focused investors, a deeper analysis reveals a complex picture. The company's consistent dividend history and notable growth rates are encouraging, yet the high payout ratio may raise concerns about the long-term sustainability of these payments. However, TIM SA's solid profitability and revenue growth, combined with its competitive position in the market, suggest that it could maintain its dividend commitments. Investors should weigh these factors and monitor the company's financial health closely to make informed decisions. For those seeking additional high-dividend opportunities, 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.
