Understanding the Upcoming Dividend Prospects for Pennon Group PLC
Pennon Group PLC (PEGRY, Financial) recently announced a dividend of $0.36 per share, payable on 2024-04-22, with the ex-dividend date set for 2024-01-25. 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 Pennon Group PLC's dividend performance and assess its sustainability.
What Does Pennon Group PLC Do?
Pennon Group PLC is a British water and environmental utility infrastructure company that operates mainly in the United Kingdom. It has smaller operations in the European Union, China, and other countries. The company operates through Water, Non-household retail and other segments. The water business comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business comprises the services provided by Pennon Water Services in the non-household water and wastewater retail market. Majority of revenue is derived from the water division.
A Glimpse at Pennon Group PLC's Dividend History
Pennon Group PLC 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 Pennon Group PLC's Dividend Yield and Growth
As of today, Pennon Group PLC currently has a 12-month trailing dividend yield of 5.80% and a 12-month forward dividend yield of 5.98%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Pennon Group PLC's annual dividend growth rate was -14.10%. Extended to a five-year horizon, this rate increased to -9.30% per year. And over the past decade, Pennon Group PLC's annual dividends per share growth rate stands at 0.20%.
Based on Pennon Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Pennon Group PLC stock as of today is approximately 3.56%.
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, Pennon Group PLC's dividend payout ratio is 0.00.
Pennon Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Pennon Group PLC's profitability 7 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. Pennon Group PLC's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Pennon Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Pennon Group PLC's revenue has increased by approximately 10.30% per year on average, a rate that outperforms approximately 59.79% 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, Pennon Group PLC's earnings increased by approximately -48.20% per year on average, a rate that outperforms approximately 6.65% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -30.80%, which outperforms approximately 4.27% of global competitors.
Next Steps
In conclusion, Pennon Group PLC's upcoming dividend payment reflects its history of consistent shareholder returns. Despite a challenging environment marked by negative dividend growth rates over the past three and five years, the company's strong profitability and robust growth metrics may provide a cushion for future dividend sustainability. Investors should consider the compelling yield on cost and the company's strategic position within the utility sector when evaluating Pennon Group PLC as a potential income-generating investment. As always, it is crucial to monitor payout ratios and growth prospects to ensure that dividend payments remain both viable and attractive over the long term. For those seeking additional high-dividend opportunities, GuruFocus Premium users can explore 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.
