Insight into Snam SpA's Upcoming Dividend and Historical Performance
Snam SpA (SNMRY, Financial) recently announced a dividend of $0.25 per share, payable on 2024-02-08, with the ex-dividend date set for 2024-01-22. 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 Snam SpA's dividend performance and assess its sustainability.
What Does Snam SpA Do?
Snam operates a network of about 38,000 kilometers of natural gas pipelines in Italy and abroad. It also holds 17.1% of European gas storage capacity and 6.5 billion cubic meters of LNG regasification capacity. Snam is investing in hydrogen, biofuels, carbon capture and storage, and energy efficiencies to prepare for the energy transition. Snam became independent from Eni in 2012 after the latter sold its stake to Cassa Depositi e Prestiti, a financial institution controlled by the Ministry of Economy and Finance.
A Glimpse at Snam SpA's Dividend History
Snam SpA has maintained a consistent dividend payment record since 2009. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Snam SpA's Dividend Yield and Growth
As of today, Snam SpA currently has a 12-month trailing dividend yield of 5.74% and a 12-month forward dividend yield of 8.12%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Snam SpA's annual dividend growth rate was 5.10%. Extended to a five-year horizon, this rate decreased to 4.70% per year. And over the past decade, Snam SpA's annual dividends per share growth rate stands at 1.40%.
Based on Snam SpA's dividend yield and five-year growth rate, the 5-year yield on cost of Snam SpA stock as of today is approximately 7.22%.
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, Snam SpA's dividend payout ratio is 1.24, which may suggest that the company's dividend may not be sustainable.
Snam SpA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Snam 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 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. Snam 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 Snam SpA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Snam SpA's revenue has increased by approximately 10.00% per year on average, a rate that outperforms approximately 58.14% 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, Snam SpA's earnings increased by approximately -13.30% per year on average, a rate that outperforms approximately 22.48% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 1.20%, which outperforms approximately 37.61% of global competitors.
Next Steps
In conclusion, Snam SpA's upcoming dividend, consistent dividend history, and attractive yield make it a potential candidate for income-focused portfolios. However, the high payout ratio raises questions about dividend sustainability despite the company's strong profitability rank. Looking at growth metrics, Snam SpA shows a solid revenue model and growth rank, although EPS growth has been negative over the past three years. Investors should weigh these factors along with Snam SpA's strategic investments in future energy solutions when considering the stock's long-term dividend prospects. 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.
