Delving into the dividend history, yield, growth rates, and sustainability of Neste Corp's dividends
Neste Corp(NTOIY, Financial) recently announced a dividend of $0.27 per share, payable on 2023-10-23, with the ex-dividend date set for 2023-09-28. As investors eagerly anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Using GuruFocus data, let's delve into Neste Corp's dividend performance and assess its sustainability.
Understanding Neste Corp's Business
Neste Corp offers renewable products and solutions, and oil products to a wide range of global markets. The business is divided into several segments, including oil products, renewable products, marketing and services among others. The oil products segment, which caters to oil companies and businesses that market oil, lubricants, and fuel products, contributes the most to the company's revenue. With a strong presence in the Baltic region through its network of service stations and refineries, Neste Corp is a significant player in the energy sector.
Tracing Neste Corp's Dividend History
Since 2012, Neste Corp has maintained a consistent dividend payment record, distributing dividends on a bi-annual basis. The chart below shows the annual Dividends Per Share which is useful for tracking historical trends.
Analyzing Neste Corp's Dividend Yield and Growth
Currently, Neste Corp has a 12-month trailing dividend yield of 3.52% and a 12-month forward dividend yield of 3.95%. This indicates an expected increase in dividend payments over the next 12 months.
Over the past three years, Neste Corp's annual dividend growth rate was 2.60%. Over a five-year horizon, this rate increased to 13.50% per year. Over the past decade, Neste Corp's annual dividends per share growth rate was an impressive 24.90%. Based on Neste Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Neste Corp stock as of today is approximately 6.63%.
Evaluating Dividend Sustainability: Payout Ratio and Profitability
The sustainability of a dividend is evaluated by examining the company's payout ratio. Neste Corp's dividend payout ratio as of 2023-06-30 is 0.78, suggesting the company's dividend may not be sustainable. The 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.
Neste Corp's profitability rank as of 2023-06-30 is 8 out of 10, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Assessing Growth Metrics for Future Prospects
Neste Corp's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its 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, Neste Corp's earnings increased by approximately 2.00% per year on average. Lastly, the company's 5-year EBITDA growth rate is 16.10%.
Conclusion
Considering Neste Corp's consistent dividend payments, impressive dividend growth rate, and relatively high payout ratio, it's clear that the company places a strong emphasis on returning value to shareholders. However, the sustainability of these dividends will largely depend on the company's ability to maintain its profitability and growth trajectory. Given its strong growth metrics and profitability rank, Neste Corp appears well-positioned to continue its dividend payouts, barring any unforeseen business downturns. As always, investors should conduct their own due diligence before making investment decisions.
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