An In-depth Look at Firstrand Ltd's Dividend Performance and Sustainability
Firstrand Ltd (FANDY, Financial) recently announced a dividend of $1.02 per share, payable on 2023-10-31, with the ex-dividend date set for 2023-10-12. 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 look into Firstrand Ltd's dividend performance and assess its sustainability.
What Does Firstrand Ltd Do?
Firstrand Ltd wholly owns FirstRand Bank, a full-service bank with a presence mostly in South Africa and surrounding southern African nations. The bank has three major divisions, which are separately branded: a retail and commercial bank, a corporate and investment bank, and an installment finance business. The bank's retail and commercial brand is the biggest contributor of normalized earnings, followed by its corporate and investment brand. FirstRand's retail and commercial division emphasizes a diverse range of financial services with a strategic emphasis on cost controls and digital platforms. The bank's corporate and investment brand heavily relies on its origination franchise as part of its value proposition.
A Glimpse at Firstrand Ltd's Dividend History
Firstrand Ltd has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Firstrand Ltd's Dividend Yield and Growth
As of today, Firstrand Ltd currently has a 12-month trailing dividend yield of 5.87% and a 12-month forward dividend yield of 5.89%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Firstrand Ltd's annual dividend growth rate was 3.00%. Extended to a five-year horizon, this rate decreased to -3.50% per year. And over the past decade, Firstrand Ltd's annual dividends per share growth rate stands at 8.50%.
Based on Firstrand Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Firstrand Ltd stock as of today is approximately 4.91%.
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 2022-12-31, Firstrand Ltd's dividend payout ratio is 0.55.
Firstrand Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Firstrand Ltd's profitability 6 out of 10 as of 2022-12-31, suggesting fair profitability. 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. Firstrand Ltd'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 Firstrand Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Firstrand Ltd's revenue has increased by approximately 2.60% per year on average, a rate that underperforms than approximately 72.23% 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, Firstrand Ltd's earnings increased by approximately 2.80% per year on average, a rate that underperforms than approximately 68.84% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 2.60%, which underperforms than approximately 70.28% of global competitors.
Next Steps
In conclusion, Firstrand Ltd's consistent dividend payment record, fair profitability, and growth metrics present an interesting proposition for dividend-seeking investors. While the company's growth metrics underperform against global competitors, its solid profitability and consistent dividend payments reflect a robust financial foundation. Investors should consider these factors when making their investment decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
