Assessing the Sustainability and Growth of Cardinal Health's Dividend
Cardinal Health Inc (CAH, Financial) recently announced a dividend of $0.50 per share, payable on 2024-01-15, with the ex-dividend date set for 2023-12-29. 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 Cardinal Health Inc's dividend performance and assess its sustainability.
What Does Cardinal Health Inc Do?
Cardinal Health is one of three leading pharmaceutical wholesalers in the U.S., engaged in sourcing and distributing branded, generic, and specialty pharmaceutical products. The company serves a diverse array of healthcare providers, including pharmacies, hospitals, and healthcare facilities across North America, Europe, and Asia. Cardinal Health Inc is a key player in the healthcare supply chain, ensuring the delivery of vital medications and medical products.
A Glimpse at Cardinal Health Inc's Dividend History
Cardinal Health Inc has demonstrated a strong commitment to returning value to shareholders through dividends, maintaining a consistent dividend payment record since 1985. The company distributes dividends quarterly and has achieved the prestigious status of a dividend aristocrat by increasing its dividend annually since 1988. This track record reflects the company's financial stability and dedication to its shareholders.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Cardinal Health Inc's Dividend Yield and Growth
Cardinal Health Inc boasts a trailing dividend yield of 1.98% and a forward dividend yield of 1.99%, indicating expectations for increasing dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 1.00%, which increases to 1.20% over a five-year period. Looking at the past decade, the annual dividends per share growth rate stands at 5.80%, showcasing Cardinal Health Inc's commitment to growing shareholder value over time.
Based on Cardinal Health Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Cardinal Health Inc stock is approximately 2.10%.
The Sustainability Question: Payout Ratio and Profitability
The dividend payout ratio is a critical metric for assessing dividend sustainability. Cardinal Health Inc's dividend payout ratio as of September 30, 2023, is 3.27, which may raise concerns about the sustainability of the company's dividend. However, the company's profitability rank of 7 out of 10 suggests good profitability prospects, with net profit reported in 8 out of the past 10 years.
Growth Metrics: The Future Outlook
Cardinal Health Inc's growth rank of 7 out of 10 indicates a strong growth trajectory compared to competitors. The company has demonstrated robust revenue growth, with a 14.50% annual increase on average, outperforming approximately 76.74% of global competitors. Cardinal Health Inc's 3-year EPS growth rate of 2.00% and a 5-year EBITDA growth rate of 1.80% further reinforce its potential for sustained growth and dividends.
Investor Takeaways
In conclusion, while Cardinal Health Inc's dividend payout ratio may present some concerns, the company's strong dividend history, consistent growth in dividends per share, and solid profitability and growth metrics suggest a favorable outlook for future dividend sustainability. Investors should consider these factors along with the company's strategic position in the healthcare industry when evaluating the stock for dividend investment.
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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.
