United Utilities Group PLC's Dividend Analysis
Understanding the Dividend Prospects of United Utilities Group PLC
United Utilities Group PLC (UUGRY) recently announced a dividend of $0.41 per share, payable on 2024-02-08, with the ex-dividend date set for 2023-12-21. 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 United Utilities Group PLC's dividend performance and assess its sustainability.
What Does United Utilities Group PLC Do?
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United Utilities Group is primarily a holding company for United Utilities Water, the country's largest regulated water and wastewater utility, serving customers in northwest England, including Manchester and Liverpool.
A Glimpse at United Utilities Group PLC's Dividend History
United Utilities Group PLC has maintained a consistent dividend payment record since 1998. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down United Utilities Group PLC's Dividend Yield and Growth
As of today, United Utilities Group PLC currently has a 12-month trailing dividend yield of 4.12% and a 12-month forward dividend yield of 4.26%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, United Utilities Group PLC's annual dividend growth rate was 2.00%. Extended to a five-year horizon, this rate increased to 2.40% per year. And over the past decade, United Utilities Group PLC's annual dividends per share growth rate stands at 2.80%.
Based on United Utilities Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of United Utilities Group PLC stock as of today is approximately 4.64%.
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 Utilities Group PLC's dividend payout ratio is 0.00.
United Utilities Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks United Utilities Group PLC's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. United Utilities Group PLC's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and United Utilities Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. United Utilities Group PLC's revenue has increased by approximately -0.70% per year on average, a rate that underperforms approximately 83.85% 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 Utilities Group PLC's earnings increased by approximately -2.90% per year on average, a rate that underperforms approximately 64.91% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -41.80%, which underperforms approximately 98.01% of global competitors.
Conclusion: Evaluating United Utilities Group PLC's Dividend Prospects
In conclusion, United Utilities Group PLC's consistent dividend history and reasonable yield are attractive to investors seeking income. However, the company's payout ratio, which is currently not applicable, along with mixed growth metrics, may raise questions regarding the long-term sustainability of its dividend payments. While the profitability rank is strong, the negative growth rates in revenue, earnings, and EBITDA suggest that the company may face challenges ahead. Investors should weigh these factors carefully when considering United Utilities Group PLC as a dividend investment. For those looking to expand their portfolio with similar stocks, 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.
