The Toro Co's Dividend Analysis
An In-Depth Look at The Toro Co's Upcoming Dividend and Historical Performance
The Toro Co (NYSE:TTC) recently announced a dividend of $0.36 per share, payable on 2024-01-11, with the ex-dividend date set for 2023-12-26. 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 Toro Co's dividend performance and assess its sustainability.
What Does The Toro Co Do?
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The Toro Co manufactures turf maintenance and landscaping equipment. The company produces reel and rotary riding products, trim cutting and walking mowers, greens rollers, turf sprayer equipment, underground irrigation systems, heavy-duty walk-behind mowers, and sprinkler systems used for professional turf and landscape maintenance and construction. Its products are marketed through a network of distributors and dealers to predominantly professional users maintaining turfs and sports fields such as golf courses. Its operating segments are Professional which generates a substantial part of its revenue, and Residential segment. The company also produces snow plowers and ice management products. Its key revenue generating market is the United States.
A Glimpse at The Toro Co's Dividend History
The Toro Co has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis.
The Toro Co has increased its dividend each year since 1985. 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 38 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down The Toro Co's Dividend Yield and Growth
As of today, The Toro Co currently has a 12-month trailing dividend yield of 1.38% and a 12-month forward dividend yield of 1.46%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, The Toro Co's annual dividend growth rate was 10.80%. Extended to a five-year horizon, this rate decreased to 10.70% per year. And over the past decade, The Toro Co's annual dividends per share growth rate stands at an impressive 15.40%.
Based on The Toro Co's dividend yield and five-year growth rate, the 5-year yield on cost of The Toro Co stock as of today is approximately 2.29%.
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 2023-10-31, The Toro Co's dividend payout ratio is 0.43.
The Toro Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks The Toro Co's profitability 9 out of 10 as of 2023-10-31, 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 Toro 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 Toro Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. The Toro Co's revenue has increased by approximately 11.60% per year on average, a rate that outperforms approximately 64.53% 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 Toro Co's earnings increased by approximately 11.70% per year on average, a rate that outperforms approximately 51.14% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.40%, which outperforms approximately 55.55% of global competitors.
Concluding Thoughts on The Toro Co's Dividend Fortitude
Considering The Toro Co's consistent dividend history, solid growth rates, and a prudent payout ratio, the company presents a compelling case for investors seeking a reliable dividend-paying stock. Coupled with The Toro Co's robust profitability and favorable growth metrics, the dividend's sustainability appears promising. As investors contemplate their next move, they might wonder if The Toro Co will continue its dividend aristocrat streak and whether its growth strategy will support further dividend enhancements. For those looking for additional investment 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.
