Assessing the Sustainability and Future Prospects of ELP's Dividend Payments
Cia Paranaense De Energia Copel(NYSE:ELP) recently announced a dividend of $0.33 per share, payable on 0000-00-00, with the ex-dividend date set for 2023-10-02. 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 deep dive into Cia Paranaense De Energia Copels dividend performance and assess its sustainability.
Understanding Cia Paranaense De Energia Copel's Business Model
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Cia Paranaense De Energia Copel is primarily involved in the production of power in the Brazilian state of Parana. Specifically, the company's operating segments include power generation and transmission, gas, power distribution, power sale, and Holding and Services. Most of the company's revenue is derived from the sale of electricity. It generates electricity through renewable energy sources such as hydroelectric, wind plants, and thermoelectric plants. The company was designed to allow Parana to manage the distribution of power and related services, so the state is a major shareholder.
Tracing Cia Paranaense De Energia Copel's Dividend History
Cia Paranaense De Energia Copel has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Examining Cia Paranaense De Energia Copel's Dividend Yield and Growth
As of today, Cia Paranaense De Energia Copel currently has a 12-month trailing dividend yield of 4.06% and a 12-month forward dividend yield of 7.86%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Cia Paranaense De Energia Copel's annual dividend growth rate was 8.80%. Extended to a five-year horizon, this rate increased to 22.30% per year. Based on Cia Paranaense De Energia Copel's dividend yield and five-year growth rate, the 5-year yield on cost of Cia Paranaense De Energia Copel stock as of today is approximately 11.25%.
Assessing Dividend Sustainability: 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 2023-06-30, Cia Paranaense De Energia Copel's dividend payout ratio is 2.74, suggesting that the company's dividend may not be sustainable.
Cia Paranaense De Energia Copel's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cia Paranaense De Energia Copel's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Evaluating Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Cia Paranaense De Energia Copel'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 Cia Paranaense De Energia Copel's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cia Paranaense De Energia Copel's revenue has increased by approximately 11.40% per year on average, a rate that outperforms approximately 65.7% 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, Cia Paranaense De Energia Copel's earnings increased by approximately -18.80% per year on average, a rate that outperforms approximately 13.67% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.70%, outperforms approximately 69.35% of global competitors.
While Cia Paranaense De Energia Copel's dividend performance shows promising growth rates, the sustainability of its dividends is in question due to its high payout ratio. However, the company's strong profitability and growth metrics suggest a potential for future earnings growth, which could support dividend payments. Investors should keep a close eye on these factors to make informed decisions.
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This article first appeared on GuruFocus.