Exploring KeyCorp's Dividend Sustainability and Growth
KeyCorp (KEY, Financial) recently announced a dividend of $0.21 per share, payable on 2023-12-15, with the ex-dividend date set for 2023-11-27. 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 KeyCorp's dividend performance and assess its sustainability.
What Does KeyCorp Do?
With assets of over $170 billion, Ohio-based KeyCorp's bank footprint spans 16 states, but it is predominantly concentrated in its two largest markets: Ohio and New York. KeyCorp is primarily focused on serving middle-market commercial clients through a hybrid community/corporate bank model.
A Glimpse at KeyCorp's Dividend History
KeyCorp has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. Since 2010, KeyCorp has increased its dividend each year, earning it the title of a dividend achiever, which is awarded to companies that have consistently raised their dividends for at least 13 consecutive years. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down KeyCorp's Dividend Yield and Growth
As of today, KeyCorp boasts a 12-month trailing dividend yield of 6.81% and a matching 12-month forward dividend yield, indicating an expectation of consistent dividend payments over the next year. Over the past three years, KeyCorp's annual dividend growth rate was 3.60%, which increased to 13.90% per year over a five-year horizon, and an impressive 17.80% over the past decade. As a result, the 5-year yield on cost for KeyCorp stock is approximately 13.05%.
The Sustainability Question: Payout Ratio and Profitability
To gauge the sustainability of its dividends, we examine KeyCorp's dividend payout ratio, which stands at 0.67 as of 2023-09-30. This indicates that the company retains a substantial portion of its earnings, bolstering funds for future growth and cushioning against downturns. KeyCorp's profitability rank is 5 out of 10, suggesting fair profitability. The company has reported positive net income each year for the past decade, reinforcing its financial stability.
Growth Metrics: The Future Outlook
KeyCorp's growth rank of 5 out of 10 reflects a fair growth outlook. Its revenue per share and 3-year revenue growth rate of 6.90% per year surpasses 53.61% of its global competitors. Additionally, the 3-year EPS growth rate at 6.10% per year outperforms 42.19% of global competitors. Furthermore, the 5-year EBITDA growth rate of 11.50% outperforms 61.5% of global competitors, indicating a strong trajectory for sustained dividend payments.
Next Steps
The analysis of KeyCorp's dividend payments, growth rate, payout ratio, profitability, and growth metrics presents a picture of a company with a solid track record of returning value to shareholders. The consistency in dividend growth, coupled with a prudent payout ratio and fair profitability, positions KeyCorp as a potentially attractive option for value investors with an eye for income-generating stocks. The company's growth metrics further support the likelihood of ongoing dividend sustainability. As investors consider KeyCorp in their portfolios, they may find it beneficial to use tools like GuruFocus Premium's High Dividend Yield Screener to identify 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.
