An Insightful Look at GAIL (India) Ltd's Upcoming Dividend and Financial Health
GAIL (India) Ltd (GAILF, Financial) recently announced a dividend of $0.4 per share, payable on a date yet to be confirmed, with the ex-dividend date set for 2024-02-05. 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 GAIL (India) Ltd's dividend performance and assess its sustainability.
What Does GAIL (India) Ltd Do?
GAIL (India) Ltd is an Indian natural gas processing and distribution company, with a majority of its shares owned by the Government of India. The company's core business encompasses the sale and transmission of natural gas and a variety of LPGs, or liquefied petroleum gases. GAIL India operates through various segments including Natural Gas Transmission; LPG Transmission; Natural Gas Trading/Marketing; Petrochemicals; LPG and Other Liquid Hydrocarbon; City Gas and Other Segments which includes GAILTEL, E&P, Power Generation, and City Gas Distribution. The lion's share of GAIL India's revenue is generated from its Natural Gas Trading/Marketing segment.
A Glimpse at GAIL (India) Ltd's Dividend History
GAIL (India) Ltd has maintained a consistent dividend payment record since 2008, with dividends currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share to track historical trends.
Breaking Down GAIL (India) Ltd's Dividend Yield and Growth
As of today, GAIL (India) Ltd boasts a 12-month trailing dividend yield of 2.68% and a 12-month forward dividend yield of 6.34%. This indicates an expectation of increased dividend payments over the next 12 months. Over the past three years, GAIL (India) Ltd's annual dividend growth rate was -1.30%. However, extending to a five-year horizon, the rate improved, averaging 15.90% per year. Over the past decade, the company's annual dividends per share growth rate stands at an impressive 13.10%.
Considering GAIL (India) Ltd's dividend yield and five-year growth rate, the 5-year yield on cost for GAIL (India) Ltd stock as of today is approximately 5.60%.
The Sustainability Question: Payout Ratio and Profitability
The sustainability of GAIL (India) Ltd's dividend can be assessed by evaluating the company's payout ratio. The dividend payout ratio, sitting at 0.42 as of 2023-12-31, indicates that the company distributes less than half of its earnings as dividends, retaining a significant part for future growth and financial stability. GAIL (India) Ltd's profitability rank of 8 out of 10, coupled with a consistent record of positive net income over the past decade, underscores its robust profitability.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must exhibit solid growth metrics. GAIL (India) Ltd's growth rank of 8 out of 10 reflects a strong growth trajectory. The company's revenue per share and 3-year revenue growth rate of 27.30% per year outperform approximately 90.48% of global competitors. Although GAIL (India) Ltd's 3-year EPS growth rate shows an average decrease of -14.20% per year, the company's 5-year EBITDA growth rate of 6.50% outperforms approximately 54.7% of global competitors, indicating potential for recovery and sustained growth.
Next Steps
In conclusion, GAIL (India) Ltd's upcoming dividend, consistent dividend history, and promising yield growth rates make it an attractive option for value investors. The company's moderate payout ratio and strong profitability suggest that its dividend payments are sustainable. Moreover, the positive growth metrics provide a reassuring outlook for the future. Investors should consider these factors when evaluating GAIL (India) Ltd as a potential addition to their dividend portfolios. To explore further, 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.
