Understanding Terna SpA's Dividend Sustainability and Growth
Terna SpA (TEZNY, Financial) recently announced a dividend of $0.37 per share, payable on a date yet to be announced, with the ex-dividend date set for 2023-11-24. 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 Terna SpA's dividend performance and assess its sustainability.
What Does Terna SpA Do?
Terna SpA is an electricity transmission system operator that owns virtually all of the Italian National Transmission Grid. With a monopoly under an Italian government license, Terna transmits and dispatches electricity throughout the country. It is also responsible for the planning, construction, and maintenance of the nation's electrical grid. Terna segments its operations into its Regulated Activities, Non-Regulated Activities, and International Activities. The company generates the vast majority of its revenue from charging transmission fees as a part of its Regulated Activities. Under its Non-Regulated Activities, Terna mainly produces and sells electricity transformers. The company has also made efforts to expand its operations into Italy's neighboring countries and North Africa.
A Glimpse at Terna SpA's Dividend History
Terna SpA has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Terna SpA's Dividend Yield and Growth
As of today, Terna SpA currently has a 12-month trailing dividend yield of 4.18% and a 12-month forward dividend yield of 4.34%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Terna SpA's annual dividend growth rate was 7.80%. Extended to a five-year horizon, this rate decreased to 7.50% per year. And over the past decade, Terna SpA's annual dividends per share growth rate stands at 4.20%. Based on Terna SpA's dividend yield and five-year growth rate, the 5-year yield on cost of Terna SpA stock as of today is approximately 6.00%.
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 2023-09-30, Terna SpA's dividend payout ratio is 0.69.
Terna SpA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Terna SpA's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each 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. Terna SpA'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 Terna SpA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Terna SpA's revenue has increased by approximately 8.20% per year on average, a rate that outperforms approximately 51.33% 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, Terna SpA's earnings increased by approximately 5.50% per year on average, a rate that outperforms approximately 51.81% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.40%, which outperforms approximately 49.02% of global competitors.
Next Steps
Considering Terna SpA's consistent dividend payments, solid dividend growth rate, moderate payout ratio, strong profitability, and robust growth metrics, investors can feel more confident about the sustainability of the company's dividends. Terna SpA appears to be well-positioned to maintain its dividend payments, with potential for future increases, making it an attractive option for value investors seeking steady income streams. For those looking to diversify their portfolio with high-dividend yield stocks, GuruFocus Premium users can utilize the High Dividend Yield Screener to discover similar investment opportunities.
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.
