Xylem Inc's Dividend Analysis
Unveiling the Dividend Prospects of Xylem Inc
Xylem Inc(NYSE:XYL) recently announced a dividend of $0.33 per share, payable on 2023-12-19, with the ex-dividend date set for 2023-11-20. 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 Xylem Inc's dividend performance and assess its sustainability.
What Does Xylem Inc Do?
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Xylem is a global leader in water technology and offers a wide range of solutions, including the transport, treatment, testing, and efficient use of water for customers in the utility, industrial, commercial, and residential sectors. Xylem was spun off from ITT in 2011. Based in Rye Brook, New York, Xylem has a presence in over 150 countries and employs 16,200. The company generated $5.5 billion in revenue and $672 million in adjusted operating income in 2022.
A Glimpse at Xylem Inc's Dividend History
Xylem Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Xylem Inc has increased its dividend each year since 2011. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 12 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Xylem Inc's Dividend Yield and Growth
As of today, Xylem Inc currently has a 12-month trailing dividend yield of 1.28% and a 12-month forward dividend yield of 1.30%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Xylem Inc's annual dividend growth rate was 7.70%. Extended to a five-year horizon, this rate increased to 10.50% per year. And over the past decade, Xylem Inc's annual dividends per share growth rate stands at an impressive 12.00%. Based on Xylem Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Xylem Inc stock as of today is approximately 2.11%.
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, Xylem Inc's dividend payout ratio is 0.53.
Xylem Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Xylem Inc's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Xylem 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 Xylem Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Xylem Inc's revenue has increased by approximately 1.70% per year on average, a rate that underperforms than approximately 68.08% 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, Xylem Inc's earnings increased by approximately -1.90% per year on average, a rate that underperforms than approximately 67.48% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 0.10%, which underperforms than approximately 68.13% of global competitors.
Concluding Insights on Xylem Inc's Dividend Profile
While Xylem Inc's dividend growth rate and commitment to increasing dividends are commendable, the company's growth metrics present a mixed picture. The robust dividend history and moderate yield coupled with a manageable payout ratio suggest a stable dividend profile. However, investors may want to keep an eye on the company's growth rates and how they compare to industry peers, as these are critical for long-term dividend sustainability. Value investors considering Xylem Inc for its dividends should also evaluate the company's strategic initiatives and market position to make an informed decision. Will Xylem Inc continue its trajectory of dividend growth, or will the underperforming growth rates necessitate a reassessment of dividend policies? Only time will tell, making it an interesting watch for dividend-focused investors.
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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.
