Truist Financial Corp's Dividend Analysis
Understanding Truist Financial Corp's Dividend Dynamics
Truist Financial Corp (NYSE:TFC) recently announced a dividend of $0.52 per share, payable on 2024-03-01, with the ex-dividend date set for 2024-02-08. 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 Truist Financial Corp's dividend performance and assess its sustainability.
What Does Truist Financial Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Based in Charlotte, North Carolina, Truist Financial Corp is the combination of BB&T and SunTrust. Truist is a regional bank with a presence primarily in the Southeastern United States. In addition to commercial banking, retail banking, and investment banking operations, the company operates several nonbank segments, the primary one being its insurance brokerage business.
A Glimpse at Truist Financial Corp's Dividend History
Truist Financial Corp has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Truist Financial Corp has increased its dividend each year since 2010. 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 14 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Truist Financial Corp's Dividend Yield and Growth
As of today, Truist Financial Corp currently has a 12-month trailing dividend yield of 5.74% and a 12-month forward dividend yield of 5.74%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Truist Financial Corp's annual dividend growth rate was 5.40%. Extended to a five-year horizon, this rate increased to 8.60% per year. And over the past decade, Truist Financial Corp's annual dividends per share growth rate stands at an impressive 10.10%.
Based on Truist Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Truist Financial Corp stock as of today is approximately 8.67%.
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, Truist Financial Corp's dividend payout ratio is 0.56.
Truist Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Truist Financial Corp's profitability 5 out of 10 as of 2023-12-31, suggesting fair profitability. 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. Truist Financial Corp's growth rank of 5 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Truist Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Truist Financial Corp's revenue has increased by approximately 3.70% per year on average, a rate that underperforms than approximately 66.55% 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, Truist Financial Corp's earnings increased by approximately 7.20% per year on average, a rate that underperforms than approximately 54.98% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 8.90%, which underperforms than approximately 47.37% of global competitors.
Next Steps
In conclusion, Truist Financial Corp's consistent dividend payments, coupled with a solid track record of dividend growth, reflect the company's commitment to shareholder returns. The payout ratio and profitability suggest that dividends are well-supported, but the growth metrics indicate some challenges ahead. While the revenue model remains strong, the growth rates in earnings and EBITDA suggest there may be hurdles in sustaining long-term dividend growth. Investors should weigh these factors carefully when considering Truist Financial Corp as part of their dividend investment strategy. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find similar opportunities.
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.
