UMB Financial Corp's Dividend Analysis
Assessing UMB Financial Corp's Upcoming Dividend and Historical Performance
UMB Financial Corp(NASDAQ:UMBF) recently announced a dividend of $0.39 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-08. 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 UMB Financial Corp's dividend performance and assess its sustainability.
What Does UMB Financial Corp Do?
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UMB Financial Corp, or UMBF, is a financial services holding company offering a suite of banking, asset management, and health spending solutions. Its customer base includes commercial, institutional, and personal customers across the United States. The company's banking subsidiaries own and operate banking and wealth-management centers mostly throughout the Midwest and Southwest regions of the U.S. Subsidiaries of the holding company and its lead bank, UMB Bank, include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisory. The bank's revenue is split nearly evenly between interest income and noninterest income.
A Glimpse at UMB Financial Corp's Dividend History
UMB Financial Corp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. UMB Financial Corp has increased its dividend each year since 1984. 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 40 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down UMB Financial Corp's Dividend Yield and Growth
As of today, UMB Financial Corp currently has a 12-month trailing dividend yield of 1.82% and a 12-month forward dividend yield of 1.85%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, UMB Financial Corp's annual dividend growth rate was 7.00%. Extended to a five-year horizon, this rate decreased to 6.10% per year. And over the past decade, UMB Financial Corp's annual dividends per share growth rate stands at 6.10%.
Based on UMB Financial Corp's dividend yield and five-year growth rate, the 5-year yield on cost of UMB Financial Corp stock as of today is approximately 2.45%.
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, UMB Financial Corp's dividend payout ratio is 0.19.
UMB Financial Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks UMB Financial Corp's profitability 6 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. UMB Financial Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and UMB Financial Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. UMB Financial Corp's revenue has increased by approximately 2.60% per year on average, a rate that underperforms than approximately 73.49% 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, UMB Financial Corp's earnings increased by approximately 6.60% per year on average, a rate that underperforms than approximately 63.23% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.20%, which underperforms than approximately 29.69% of global competitors.
Next Steps
In conclusion, UMB Financial Corp's consistent dividend history, coupled with a moderate yield and growth rate, presents a compelling case for income-focused investors. The company's prudent payout ratio and fair profitability suggest that its dividend payments are sustainable in the near term. However, investors should also consider the growth metrics, which indicate some areas where UMB Financial Corp lags behind its peers. Considering these factors, value investors may find UMB Financial Corp an interesting prospect for a balanced portfolio. Will UMB Financial Corp continue its dividend aristocrat streak, and can it address the growth challenges to ensure long-term sustainability? GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to explore such investment 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.
