WestRock Co's Dividend Analysis
Assessing the Sustainability and Growth of WestRock Co's Dividends
WestRock Co (NYSE:WRK) recently announced a dividend of $0.3 per share, payable on 2024-02-21, with the ex-dividend date set for 2024-02-08. 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 look into WestRock Co's dividend performance and assess its sustainability.
What Does WestRock Co Do?
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WestRock manufactures corrugated packaging and consumer packaging, such as folding cartons and paperboard. After the merger of RockTenn and MeadWestvaco in fall 2015, WestRock became the largest North American producer of solid bleached sulfate and the second-largest producer of containerboard, which is used in the production of shipping containers.
A Glimpse at WestRock Co's Dividend History
WestRock Co has maintained a consistent dividend payment record since 1994. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down WestRock Co's Dividend Yield and Growth
As of today, WestRock Co currently has a 12-month trailing dividend yield of 2.94% and a 12-month forward dividend yield of 3.15%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, WestRock Co's annual dividend growth rate was -6.10%. Extended to a five-year horizon, this rate decreased to -11.90% per year. And over the past decade, WestRock Co's annual dividends per share growth rate stands at 5.30%.
Based on WestRock Co's dividend yield and five-year growth rate, the 5-year yield on cost of WestRock Co stock as of today is approximately 1.56%.
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 2023-12-31, WestRock Co's dividend payout ratio is 0.42.
WestRock Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks WestRock Co's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 7 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. WestRock Co's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and WestRock Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. WestRock Co's revenue has increased by approximately 5.40% per year on average, a rate that underperforms than approximately 57.81% 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, WestRock Co's earnings increased by approximately 3.20% per year on average, a rate that underperforms than approximately 58.99% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -2.20%, which underperforms than approximately 74.66% of global competitors.
Next Steps
Considering WestRock Co's consistent dividend payments, the recent dividend announcement, and the company's financial health, value investors may find WestRock Co an interesting prospect for their portfolios. While the dividend growth rate has seen fluctuations, the company's reasonable payout ratio and profitability rank indicate a potential for sustainable dividend payments. However, the growth metrics present a mixed picture, signaling the need for investors to weigh these factors against their investment strategy. As WestRock Co navigates through industry trends and economic cycles, investors should monitor the company's ability to maintain its dividend commitments against its growth and profitability performance.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
