Woolworths Holdings Ltd's Dividend Analysis
Assessing the Sustainability of Woolworths Holdings Ltd's Upcoming Dividend
Woolworths Holdings Ltd (WLWHY) recently announced a dividend of $0.08 per share, payable on 2024-03-29, with the ex-dividend date set for 2024-03-15. 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 Woolworths Holdings Ltd's dividend performance and assess its sustainability.
What Does Woolworths Holdings Ltd Do?
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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.
A Glimpse at Woolworths Holdings Ltd's Dividend History
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.
Breaking Down Woolworths Holdings Ltd's Dividend Yield and Growth
As of today, Woolworths Holdings Ltd currently has a 12-month trailing dividend yield of 4.88% and a 12-month forward dividend yield of 4.56%. This suggests an expectation of decreased 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 4.88%.
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, Woolworths Holdings Ltd's dividend payout ratio is 0.74, which may suggest 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 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 8 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. Woolworths Holdings Ltd's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. 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 1.10% per year on average, a rate that underperforms approximately 60.56% 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 36.40% per year on average, a rate that underperforms approximately 22.3% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 4.20%, which underperforms approximately 60.55% of global competitors.
Next Steps
In conclusion, while Woolworths Holdings Ltd's dividend history shows a commitment to returning value to shareholders, the sustainability of its future dividends is not guaranteed. Investors should consider the company's modest payout ratio, solid profitability rank, and mixed growth metrics when evaluating the reliability of future dividend payments. Woolworths Holdings Ltd's recent performance suggests that while there are positive aspects, there is also room for improvement. As value investors, it is essential to keep a close eye on these indicators to make informed decisions. Will Woolworths Holdings Ltd continue to provide a stable dividend income stream, or will adjustments be necessary? For those looking to explore further, 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.
