Williams Companies Inc's Dividend Analysis
Assessing the Sustainability of Williams Companies Inc's Dividend
Williams Companies Inc (NYSE:WMB) recently announced a dividend of $0.48 per share, payable on 2024-03-25, with the ex-dividend date set for 2024-03-07. 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 Williams Companies Inc's dividend performance and assess its sustainability.
What Does Williams Companies Inc Do?
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Williams Companies is a midstream energy company that owns and operates the large Transco and Northwest pipeline systems and associated natural gas gathering, processing, and storage assets. In August 2018, the firm acquired the remaining 26% ownership of its limited partner, Williams Partners.
A Glimpse at Williams Companies Inc's Dividend History
Williams Companies Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Williams Companies Inc's Dividend Yield and Growth
As of today, Williams Companies Inc currently has a 12-month trailing dividend yield of 4.90% and a 12-month forward dividend yield of 5.19%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Williams Companies Inc's annual dividend growth rate was 3.80%. Extended to a five-year horizon, this rate increased to 5.10% per year. And over the past decade, Williams Companies Inc's annual dividends per share growth rate stands at -0.50%.
Based on Williams Companies Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Williams Companies Inc stock as of today is approximately 6.28%.
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, Williams Companies Inc's dividend payout ratio is 0.80. And this may suggest that the company's dividend may not be sustainable.
Williams Companies Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Williams Companies Inc's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 7 out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Williams Companies Inc'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 Williams Companies Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Williams Companies Inc's revenue has increased by approximately 12.00% per year on average, a rate that underperforms than approximately 51.81% 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, Williams Companies Inc's earnings increased by approximately 24.20% per year on average, a rate that underperforms than approximately 44.79% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 23.40%, which underperforms than approximately 28.57% of global competitors.
Next Steps
In conclusion, Williams Companies Inc's upcoming dividend payout, along with its history of consistent dividend payments, provides an attractive proposition for income-focused investors. However, the sustainability of these dividends is a nuanced matter, hinging on several factors including the payout ratio, profitability, and growth metrics. While the company's profitability rank and growth trajectory appear promising, the payout ratio and comparison with global competitors suggest there may be areas to watch closely. As Williams Companies Inc navigates the dynamic energy sector, investors should consider these factors in their overall assessment of the stock's dividend prospects.
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.
