The Timken Co's Dividend Analysis
An In-Depth Look at The Timken Co's Upcoming Dividend and Historical Performance
The Timken Co (NYSE:TKR) recently announced a dividend of $0.33 per share, payable on 2024-03-06, with the ex-dividend date set for 2024-02-16. 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 The Timken Co's dividend performance and assess its sustainability.
What Does The Timken Co Do?
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The Timken Company is a manufacturer of bearings, gear belts, and chain-related products. The company sells its portfolio of bearings, including tapered, spherical and cylindrical roller bearings, and thrust and ball bearings, through a network of authorized dealers to end users or directly to original equipment manufacturers. End-market sectors include general industrial, automotive, rail, energy, heavy truck, defense, agriculture, metals, mining, civil aerospace, construction, pulp and paper, and cement industries. Its segments are Mobile Industries and Process industries. Timken generates its revenue in the United States of America.
A Glimpse at The Timken Co's Dividend History
The Timken Co has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. The Timken Co 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 The Timken Co's Dividend Yield and Growth
As of today, The Timken Co currently has a 12-month trailing dividend yield of 1.59% and a 12-month forward dividend yield of 1.62%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, The Timken Co's annual dividend growth rate was 4.80%. Extended to a five-year horizon, this rate decreased to 3.30% per year. And over the past decade, The Timken Co's annual dividends per share growth rate stands at 3.00%.
Based on The Timken Co's dividend yield and five-year growth rate, the 5-year yield on cost of The Timken Co stock as of today is approximately 1.87%.
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, The Timken Co's dividend payout ratio is 0.19.
The Timken Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Timken Co's profitability 9 out of 10 as of 2023-12-31, 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. The Timken Co'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 The Timken Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Timken Co's revenue has increased by approximately 12.90% per year on average, a rate that outperforms approximately 66.87% 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, The Timken Co's earnings increased by approximately 19.80% per year on average, a rate that outperforms approximately 61.63% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.40%, which outperforms approximately 57.72% of global competitors.
Next Steps
In conclusion, The Timken Co's consistent dividend payments, annual increases, and a reasonable payout ratio underscore its commitment to shareholder returns. The company's impressive profitability and growth metrics further fortify the sustainability of its dividends. Investors in The Timken Co can be reassured by the company's financial health and its ability to maintain a stable dividend policy moving forward. As the market anticipates the upcoming dividend, it's an opportune moment for value investors to consider the long-term income potential that The Timken Co offers. Will The Timken Co continue to deliver shareholder value and grow its dividends in the years to come?
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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.
