XP Inc's Dividend Analysis
Unveiling the Dividend Prospects of XP Inc
XP Inc (NASDAQ:XP) recently announced a dividend of $0.73 per share, payable on 2023-12-22, with the ex-dividend date set for 2023-12-12. 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 XP Inc's dividend performance and assess its sustainability.
What Does XP Inc Do?
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XP Inc is a Cayman Island-based technology-driven financial services platform. It is a provider of low-fee financial products and services in Brazil. The company evaluates its business through a single segment such as monitoring operations, making decisions on fund allocation, and evaluating the performance. It generates revenue through the Brokerage commission.
A Glimpse at XP Inc's Dividend History
XP Inc has maintained a consistent dividend payment record since 2023. Dividends are currently distributed on a bi-annually basis. XP Inc has increased its dividend each year since -, 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 2023 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down XP Inc's Dividend Yield and Growth
As of today, XP Inc currently has a 12-month trailing dividend yield of 2.45% and a 12-month forward dividend yield of 5.52%. This suggests an expectation of increased dividend payments over the next 12 months.
XP Inc's dividend yield of 2.45% is near a 10-year low and underperforms than 47.43% of global competitors in the Capital Markets industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Based on XP Inc's dividend yield and five-year growth rate, the 5-year yield on cost of XP Inc stock as of today is approximately 2.45%.
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 2023-09-30, XP Inc's dividend payout ratio is 0.44.
XP Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks XP Inc's profitability 5 out of 10 as of 2023-09-30, 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. XP Inc's growth rank of 5 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and XP Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. XP Inc's revenue has increased by approximately 4.90% per year on average, a rate that underperforms than approximately 54.93% of global competitors.
Concluding Insights on XP Inc's Dividend Profile
For value investors, the dividend profile of XP Inc offers a mixed picture. While the company has a history of consistent dividend payments and expectations of increased dividends, its yield is at a 10-year low and lags behind many competitors. The payout ratio and profitability rank indicate a balance between dividend distribution and retained earnings for growth, reflecting a cautious yet sustainable approach. The growth metrics, with a middling rank and revenue growth rate, suggest there may be challenges ahead. Investors should weigh these factors against their investment strategy and consider the company's overall financial health and market position. 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.
