Exploring Ecolab Inc's Dividend History, Growth, and Sustainability
Ecolab Inc(ECL, Financial) recently announced a dividend of $0.53 per share, payable on 2023-10-16, with the ex-dividend date set for 2023-09-18. 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 Ecolab Incs dividend performance and assess its sustainability.
About Ecolab Inc
Ecolab produces and markets cleaning and sanitation products for the hospitality, healthcare, and industrial markets. The firm is the global market share leader in this category with a wide array of products and services, including dish and laundry washing systems, pest control, and infection control products. The company has a strong hold on the U.S. market and is looking to increase its profitability abroad. Additionally, Ecolab serves customers in water, manufacturing, and life sciences end markets, selling customized solutions.
Ecolab Inc's Dividend History
Ecolab Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Ecolab Inc has increased its dividend each year since 1986. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 37 years.
Understanding Ecolab Inc's Dividend Yield and Growth
As of today, Ecolab Inc currently has a 12-month trailing dividend yield of 1.18% and a 12-month forward dividend yield of 1.19%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Ecolab Inc's annual dividend growth rate was 3.60%. Extended to a five-year horizon, this rate increased to 5.80% per year. And over the past decade, Ecolab Inc's annual dividends per share growth rate stands at 9.20%.
Based on Ecolab Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ecolab Inc stock as of today is approximately 1.56%.
Assessing Ecolab Inc's Dividend Sustainability
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, Ecolab Inc's dividend payout ratio is 0.51.
Ecolab Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ecolab Inc's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Exploring Ecolab Inc's Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Ecolab 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 Ecolab Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ecolab Inc's revenue has increased by approximately 4.90% per year on average, a rate that underperforms than approximately 66.23% 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, Ecolab Inc's earnings increased by approximately -7.90% per year on average, a rate that underperforms than approximately 77.05% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -5.90%, which underperforms than approximately 82.4% of global competitors.
Conclusion
While Ecolab Inc's consistent dividend payments and growth rates are commendable, investors should pay attention to its payout ratio and growth metrics. The company's profitability rank and dividend payout ratio suggest a sustainable dividend. However, the company's growth metrics, particularly its EPS and EBITDA growth rates, underperform most global competitors. Therefore, investors should consider these factors when evaluating Ecolab Inc's dividend sustainability.
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