Unraveling Woolworths Holdings Ltd's Dividend Performance: An Insightful Analysis
A Comprehensive Review of Dividend History, Yield, Growth, and Sustainability
Woolworths Holdings Ltd(WLWHY) recently announced a dividend of $0.08 per share, payable on 2023-10-06, with the ex-dividend date set for 2023-09-21. 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 deep dive into Woolworths Holdings Ltd's dividend performance and assess its sustainability.
A Brief Overview of Woolworths Holdings Ltd
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Woolworths Holdings Ltd is a South Africa-based retail group. Forty percent of revenue (including concession sales) is generated in Australasia. The group has three main operating divisions: Woolworths South Africa, based in South Africa and operating across 11 countries in sub-Saharan Africa, and David Jones and Country Road Group, both based in Australia. Woolworths Financial Services is a joint venture between Woolworths and Barclays Africa Group; Barclays is supervising the credit policy, risk, and funding aspects, while Woolworths is leading the customer integration.
Historical Perspective: Woolworths Holdings Ltd's Dividend Track Record
Woolworths Holdings Ltd has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Decoding Dividend Yield and Growth: A Snapshot of Woolworths Holdings Ltd
As of today, Woolworths Holdings Ltd currently has a 12-month trailing dividend yield of 4.54% and a 12-month forward dividend yield of 4.31%. This suggests an expectation of decrease dividend payments over the next 12 months. Over the past three years, Woolworths Holdings Ltd's annual dividend growth rate was 17.90%. Based on Woolworths Holdings Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Woolworths Holdings Ltd stock as of today is approximately 4.54%.
Testing Dividend Sustainability: Payout Ratio and Profitability Analysis
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, Woolworths Holdings Ltd's dividend payout ratio is 0.73, suggesting that the company's dividend may not be sustainable. Woolworths Holdings Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Woolworths Holdings Ltd's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 8 years out of past 10 years.
Future Prospects: Evaluating Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Woolworths Holdings Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Woolworths Holdings Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Woolworths Holdings Ltd's revenue has increased by approximately 1.70% per year on average, a rate that underperforms than approximately 55.97% 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, Woolworths Holdings Ltd's earnings increased by approximately 93.00% per year on average, a rate that underperforms than approximately 5.19% of global competitors.
Concluding Remarks
Woolworths Holdings Ltd's dividend payments, growth rate, payout ratio, profitability, and growth metrics present a mixed picture. While the company has a good profitability rank and a consistent dividend payment record, its payout ratio and growth metrics suggest some areas of concern. This analysis underscores the importance of a comprehensive evaluation before making any investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
