Unraveling Absa Group Ltd's Dividend Performance and Sustainability
A Comprehensive Analysis of Absa Group Ltd's Dividend History, Yield, Growth, and More
Absa Group Ltd(AGRPF) recently announced a dividend of $6.85 per share, payable on 2023-09-18, with the ex-dividend date set for 2023-09-13. 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 Absa Group Ltd's dividend performance and assess its sustainability.
Understanding Absa Group Ltd's Business Model
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Absa Group Ltd is a financial services company with five main business segments: Product Solutions Cluster, Everyday Banking, Relationship Banking, Absa Regional Operations RBB (ARO RBB), CIB, & Head Office, Treasury, and other operations. The majority of its revenue is from the Corporate and Investment Bank (CIB) segment which focuses on new-to-bank clients across key growth and priority sectors. CIB continued to up-sell and cross-sell new products and services to existing clients. Geographically, the majority of its business is from South Africa.
Tracing Absa Group Ltd's Dividend History
Absa Group Ltd has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a bi-annual basis. The chart below provides a historical view of the company's annual Dividends Per Share.
Assessing Absa Group Ltd's Dividend Yield and Growth
As of today, Absa Group Ltd currently has a 12-month trailing dividend yield of 7.80% and a 12-month forward dividend yield of 7.79%. This suggests an expectation of slightly decreased dividend payments over the next 12 months. On a five-year horizon, this rate decreased to -10.80% per year. Over the past decade, Absa Group Ltd's annual dividends per share growth rate stands at -1.50%. As of today, the 5-year yield on cost of Absa Group Ltd stock is approximately 4.40%.
Evaluating Absa Group Ltd's Dividend Sustainability
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, Absa Group Ltd's dividend payout ratio is 0.51.
Absa Group Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Absa Group Ltd's profitability 6 out of 10 as of 2023-06-30, 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 for Absa Group Ltd
Absa Group Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Absa Group Ltd's revenue has increased by approximately 7.00% per year on average, a rate that outperforms approximately 53.9% of global competitors. During the past three years, Absa Group Ltd's earnings increased by approximately 13.00% per year on average, a rate that outperforms approximately 62.29% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 5.40%, outperforms approximately 39.01% of global competitors.
Concluding Remarks
Considering Absa Group Ltd's consistent dividend payments, fair dividend growth rate, reasonable payout ratio, and robust profitability, the company presents a favorable case for dividend investors. However, the slightly negative dividend growth rate and the expected decrease in dividend payments over the next 12 months warrant careful monitoring. Furthermore, the company's fair growth metrics indicate a positive future outlook, essential for sustaining dividends in the long run. Investors are advised to keep a close eye on these factors while making their investment decisions.
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This article first appeared on GuruFocus.
