Unveiling the Potential of CWCO's Dividend Yield, Growth, and Sustainability
Consolidated Water Co Ltd (CWCO, Financial) recently announced a dividend of $0.1 per share, payable on October 31, 2023, with the ex-dividend date set for September 29, 2023. As investors eagerly anticipate this upcoming payment, it's crucial to take a closer look at the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Consolidated Water Co Ltd's dividend performance and assess its sustainability.
What Does Consolidated Water Co Ltd Do?
Consolidated Water Co Ltd is a water utility company. It develops and operates seawater desalination plants and water distribution systems. The company's business segments are; The retail segment operates the water utility for the Seven Mile Beach and West Bay areas of Grand Cayman Island, The bulk segment supplies potable water to government utilities in Grand Cayman and The Bahamas under long-term contracts, The services segment designs, constructs and sells water infrastructure and provides management and operating services to third parties, and The manufacturing segment manufactures and services a wide range of custom and specialized water-related products applicable to commercial, municipal and industrial water production, supply and treatment.
A Glimpse at Consolidated Water Co Ltd's Dividend History
Consolidated Water Co Ltd has maintained a consistent dividend payment record since 1996. Dividends are currently distributed on a quarterly basis. Consolidated Water Co Ltd has increased its dividend each year since 2002. 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 21 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Consolidated Water Co Ltd's Dividend Yield and Growth
As of today, Consolidated Water Co Ltd currently has a 12-month trailing dividend yield of 1.20% and a 12-month forward dividend yield of 1.24%. This suggests an expectation of increased dividend payments over the next 12 months.
Consolidated Water Co Ltd's dividend yield of 1.20% is near a 10-year low and underperforms than 88.11% of global competitors in the Utilities - Regulated industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Extended to a five-year horizon, this rate increased to 1.30% per year. And over the past decade, Consolidated Water Co Ltd's annual dividends per share growth rate stands at 1.70%. Based on Consolidated Water Co Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Consolidated Water Co Ltd stock as of today is approximately 1.28%.
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 June 30, 2023, Consolidated Water Co Ltd's dividend payout ratio is 0.36.
Consolidated Water Co Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Consolidated Water Co Ltd's profitability 8 out of 10 as of June 30, 2023, 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. Consolidated Water Co Ltd's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Consolidated Water Co Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Consolidated Water Co Ltd's revenue has increased by approximately 10.40% per year on average, a rate that outperforms approximately 61.11% 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, Consolidated Water Co Ltd's earnings increased by approximately -9.10% per year on average, a rate that outperforms approximately 24.34% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -3.30%, which outperforms approximately 23.6% of global competitors.
Next Steps
In conclusion, Consolidated Water Co Ltd's consistent dividend payments, impressive growth rate, and low payout ratio indicate a promising future for its dividends. The company's strong profitability and growth metrics suggest a robust business model capable of sustaining and potentially increasing dividend payments. However, investors should continue to monitor the company's performance, considering the industry trends and the company's financial health. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
