An In-depth Analysis of the Company's Dividend History, Yield, and Sustainability
Williams Companies Inc(WMB, Financial) recently announced a dividend of $0.45 per share, payable on 2023-09-25, with the ex-dividend date set for 2023-09-08. 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 deep dive into Williams Companies Inc's dividend performance and assess its sustainability.
Understanding Williams Companies Inc
Williams 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.
Tracing 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.
Deciphering Williams Companies Inc's Dividend Yield and Growth
As of today, Williams Companies Inc currently has a 12-month trailing dividend yield of 5.10% and a 12-month forward dividend yield of 5.23%. 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 7.00% 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 7.15%.
Is Williams Companies Inc's Dividend Sustainable?
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 2023-06-30, Williams Companies Inc's dividend payout ratio is 0.78. 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 6 out of 10 as of 2023-06-30, suggesting fair profitability. The company has reported net profit in 7 years out of past 10 years.
Williams Companies Inc's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Williams Companies Inc'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 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 9.90% per year on average, a rate that underperforms than approximately 50.35% 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 33.00% per year on average, a rate that underperforms than approximately 38.05% of global competitors.
Concluding Thoughts
Considering Williams Companies Inc's consistent dividend payments, moderate growth rate, and fair profitability, the company presents a mixed picture for dividend investors. The high payout ratio might raise concerns about the sustainability of dividends. However, the company's growth and profitability metrics suggest potential for future earnings. As always, investors should conduct their due diligence before making investment decisions.
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