United Rentals Inc's Dividend Analysis
Understanding the Dividend Performance and its Sustainability
United Rentals Inc (NYSE:URI) recently announced a dividend of $1.48 per share, payable on 2023-11-22, with the ex-dividend date set for 2023-11-07. 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 delve into United Rentals Inc's dividend performance and assess its sustainability.
What Does United Rentals Inc Do?
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United Rentals is the world's largest equipment rental company. It primarily operates in the United States and Canada, where it commands approximately 17% share in a highly fragmented market. It serves three end markets: general industrial, commercial construction, and residential construction. As the company has grown organically and through hundreds of acquisitions since it went public in 1997, its catalog now includes a range of specialty equipment and other items that can be rented for indefinitely long periods.
A Glimpse at United Rentals Inc's Dividend History
United Rentals Inc has maintained a consistent dividend payment record since 2023, with dividends currently distributed on a quarterly basis. United Rentals Inc has increased its dividend each year since its inception. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 2023 years.
Breaking Down United Rentals Inc's Dividend Yield and Growth
As of today, United Rentals Inc currently has a 12-month trailing dividend yield of 1.01% and a 12-month forward dividend yield of 1.36%, suggesting an expectation of increased dividend payments over the next 12 months. Based on United Rentals Inc's dividend yield and five-year growth rate, the 5-year yield on cost of United Rentals Inc stock as of today is approximately 1.01%.
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, United Rentals Inc's dividend payout ratio is 0.13.
United Rentals Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks United Rentals Inc's profitability 10 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. United Rentals Inc's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors. United Rentals Inc's revenue has increased by approximately 10.90% per year on average, a rate that outperforms than approximately 69.27% 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, United Rentals Inc's earnings increased by approximately 24.70% per year on average, a rate that outperforms than approximately 71.36% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 11.30%, which outperforms than approximately 57.87% of global competitors.
Next Steps
Given United Rentals Inc's consistent dividend payments, impressive dividend growth rate, low payout ratio, high profitability, and robust growth metrics, it appears to be a promising choice for investors seeking dividend income. However, as with any investment, it's crucial to conduct thorough research and consider the company's overall financial health and market conditions before making a decision. 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.
