Unveiling West Fraser Timber Co.Ltd's Dividend Dynamics: An In-depth Analysis
Exploring the company's dividend history, yield, growth rates and sustainability
West Fraser Timber Co.Ltd(NYSE:WFG) recently announced a dividend of $0.3 per share, payable on 2023-10-13, with the ex-dividend date set for 2023-09-26. 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 West Fraser Timber Co.Ltd's dividend performance and assess its sustainability.
What Does West Fraser Timber Co.Ltd Do?
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West Fraser Timber is a softwood lumber company that also produces wood panels and pulp products. The company produces its wood products globally, with lumber mills in British Columbia, Alberta, Europe, and the southeastern United States. Following its acquisition of Norbord in 2021, West Fraser is now one of the largest oriented strand board, or OSB, producers in the world.
A Glimpse at West Fraser Timber Co.Ltd's Dividend History
West Fraser Timber Co.Ltd has maintained a consistent dividend payment record since 2004. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down West Fraser Timber Co.Ltd's Dividend Yield and Growth
As of today, West Fraser Timber Co.Ltd currently has a 12-month trailing dividend yield of 1.72% and a 12-month forward dividend yield of 1.72%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, West Fraser Timber Co.Ltd's annual dividend growth rate was 25.10%. Extended to a five-year horizon, this rate increased to 26.30% per year. And over the past decade, West Fraser Timber Co.Ltd's annual dividends per share growth rate stands at an impressive 19.20%.
Based on West Fraser Timber Co.Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of West Fraser Timber Co.Ltd stock as of today is approximately 5.53%.
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 2023-06-30, West Fraser Timber Co.Ltd's dividend payout ratio is 1.36. And this may suggest that the company's dividend may not be sustainable.
West Fraser Timber Co.Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks West Fraser Timber Co.Ltd's profitability 8 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. West Fraser Timber Co.Ltd'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 West Fraser Timber Co.Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. West Fraser Timber Co.Ltd's revenue has increased by approximately 25.30% per year on average, a rate that outperforms than approximately 91.01% of global competitors.
Next Steps
Investors should consider West Fraser Timber Co.Ltd's solid dividend payment history, impressive growth rates, and strong profitability. However, the high payout ratio indicates a potential risk for dividend sustainability. Investors should keep these factors in mind when making investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
