Exploring Cardinal Health Inc's Dividend History, Growth, and Future Prospects
Cardinal Health Inc(CAH, Financial) recently announced a dividend of $0.5 per share, payable on 2023-10-15, with the ex-dividend date set for 2023-10-02. As investors eagerly anticipate this upcoming payment, it's worthwhile to examine the company's dividend history, yield, and growth rates. Using data from GuruFocus, let's delve into Cardinal Health Inc's dividend performance and evaluate its sustainability.
Understanding Cardinal Health Inc's Business Model
Cardinal Health Inc is one of the three leading pharmaceutical wholesalers in the U.S., involved in the sourcing and distribution of branded, generic, and specialty pharmaceutical products. The company's clientele includes pharmacies (retail chains, independent, and mail-order), hospital networks, and healthcare providers. Together with Cencora and McKesson, these three companies dominate over 90% of the U.S. pharmaceutical wholesale industry. Cardinal Health also supplies medical-surgical products and equipment to healthcare facilities in North America, Europe, and Asia.
A Glimpse at Cardinal Health Inc's Dividend History
Cardinal Health Inc has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1988, earning it the status of a dividend aristocrat. This prestigious title is given to companies that have consistently increased their dividend each year for at least the past 35 years.
Breaking Down Cardinal Health Inc's Dividend Yield and Growth
As of today, Cardinal Health Inc boasts a 12-month trailing dividend yield of 2.29% and a 12-month forward dividend yield of 2.31%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Cardinal Health Inc's annual dividend growth rate was 1.00%. Extended to a five-year horizon, this rate increased to 1.20% per year. And over the past decade, Cardinal Health Inc's annual dividends per share growth rate stands at 5.80%. Based on Cardinal Health Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Cardinal Health Inc stock as of today is approximately 2.44%.
Payout Ratio and Profitability: Assessing Dividend Sustainability
To evaluate the sustainability of the dividend, it's crucial to consider the company's payout ratio. The dividend payout ratio gives insights into the portion of earnings the company distributes as dividends. A lower ratio indicates that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Cardinal Health Inc's dividend payout ratio is 1.99, which may suggest that the company's dividend may not be sustainable.
Cardinal Health Inc's profitability rank provides an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cardinal Health Inc's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported net profit in 8 out of the past 10 years.
Growth Metrics: The Future Outlook
For dividends to be sustainable, the company must demonstrate robust growth metrics. Cardinal Health Inc's growth rank of 7 out of 10 suggests a promising growth trajectory relative to its competitors. Furthermore, Cardinal Health Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a robust revenue model. Cardinal Health Inc's revenue has increased by approximately 14.50% per year on average, a rate that outperforms approximately 78.57% of global competitors.
Concluding Remarks
Cardinal Health Inc's consistent dividend payments, steady growth rate, and solid profitability make it an intriguing prospect for dividend-focused investors. However, its high payout ratio raises questions about the sustainability of its dividends. Therefore, while the company's growth metrics and profitability rank are encouraging, investors should closely monitor its payout ratio and revenue growth to ensure the sustainability of its dividends. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
