Unwrapping Sysco Corp's Dividend Performance: A Comprehensive Analysis
Delving into Sysco Corp's dividend history, yield, growth and sustainability
Sysco Corp(NYSE:SYY) recently announced a dividend of $0.5 per share, payable on 2023-10-27, with the ex-dividend date set for 2023-10-05. 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 Sysco Corps dividend performance and assess its sustainability.
About Sysco Corp
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Sysco is the largest U.S. food-service distributor, boasting 17% market share of the highly fragmented food-service distribution industry. Sysco distributes over 400,000 food and nonfood products to restaurants (63% of revenue), healthcare facilities (8%), education and government buildings (8%), travel and leisure (7%), and other locations (14%) where individuals consume away-from-home meals. In fiscal 2023, 70% of the firm's revenue was derived from its U.S. foodservice operations, while its international (18%), quick-service (10%), and other (2%) segments made up the difference.
Sysco Corp's Dividend Track Record
Sysco Corp has maintained a consistent dividend payment record since 1971. Dividends are currently distributed on a quarterly basis. Sysco Corp has increased its dividend each year since 1971. The stock is thus listed as a dividend king, an honor that is given to companies that have increased their dividend each year for at least the past 52 years.
Understanding Sysco Corp's Dividend Yield and Growth
As of today, Sysco Corp currently has a 12-month trailing dividend yield of 3.06% and a 12-month forward dividend yield of 3.11%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Sysco Corp's annual dividend growth rate was 4.20%. Extended to a five-year horizon, this rate increased to 7.00% per year. And over the past decade, Sysco Corp's annual dividends per share growth rate stands at 6.60%.
Based on Sysco Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Sysco Corp stock as of today is approximately 4.29%.
Is Sysco Corp's Dividend Sustainable?
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, Sysco Corp's dividend payout ratio is 0.57.
Sysco Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sysco Corp'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.
Sysco Corp's Growth Metrics: A Look into the Future
To ensure the sustainability of dividends, a company must have robust growth metrics. Sysco Corp'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 Sysco Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sysco Corp's revenue has increased by approximately 13.30% per year on average, a rate that outperforms than approximately 76.04% 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, Sysco Corp's earnings increased by approximately 102.20% per year on average, a rate that outperforms than approximately 94.09% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which outperforms than approximately 36.14% of global competitors.
Conclusion
Considering Sysco Corp's consistent dividend payments, impressive growth rate, reasonable payout ratio, high profitability, and robust growth metrics, it seems the company is well-positioned to sustain its dividends in the foreseeable future. However, investors should continue to monitor these metrics to ensure they remain favorable.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article first appeared on GuruFocus.
