Assessing Kenvue Inc's Dividend Sustainability and Growth
Kenvue Inc (KVUE, Financial) recently announced a dividend of $0.2 per share, payable on 2024-02-28, with the ex-dividend date set for 2024-02-13. 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 Kenvue Inc's dividend performance and assess its sustainability.
What Does Kenvue Inc Do?
Kenvue Inc is the world's largest pure-play consumer health company by sales, generating $15 billion in annual revenue. Formerly known as Johnson & Johnson's consumer segment, Kenvue spun off and went public in May 2023. It operates in a variety of silos within consumer health, such as cough, cold and allergy care, pain management, face and body care, and oral care, as well as women's health. Its portfolio includes a wide array of some of the most well-known brands in the space, including Tylenol, Listerine, Johnson's, Aveeno, and Neutrogena. Despite playing in a fragmented industry with intense competition and ever-changing consumer preferences, many of Kenvue's brands are the global leader in their respective segment thanks to their strong brand power.
A Glimpse at Kenvue Inc's Dividend History
Kenvue Inc has maintained a consistent dividend payment record since 2023. Dividends are currently distributed on a quarterly basis. Kenvue Inc has increased its dividend each year since -, positioning the stock as a potential dividend king, a prestigious title reserved for companies with a long history of consecutive dividend increases. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Kenvue Inc's Dividend Yield and Growth
As of today, Kenvue Inc currently has a 12-month trailing dividend yield of 2.07% and a 12-month forward dividend yield of 4.14%. This suggests an expectation of increased dividend payments over the next 12 months. Kenvue Inc's dividend yield of 2.07% is near a 10-year high and outperforms 44.98% of global competitors in the Consumer Packaged Goods industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.
Based on Kenvue Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Kenvue Inc stock as of today is approximately 2.04%.
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 2023-12-31, Kenvue Inc's dividend payout ratio is 0.35.
Kenvue Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Kenvue Inc's profitability 4 out of 10 as of 2023-12-31, suggesting the dividend may not be sustainable. The company has reported net profit in 3 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Kenvue Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Kenvue Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Kenvue Inc's revenue has increased by approximately 1.40% per year on average, a rate that underperforms than approximately 69.4% 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, Kenvue Inc's earnings increased by approximately -9.70% per year on average, a rate that underperforms than approximately 69.99% of global competitors.
Next Steps
In conclusion, while Kenvue Inc presents a noteworthy dividend yield, its growth metrics and profitability rank raise questions about the long-term sustainability of its dividends. Investors should consider both the opportunities presented by the company's strong brand presence and the risks associated with its current growth and profitability profiles. As Kenvue Inc navigates the competitive consumer health landscape, value investors must weigh these factors carefully when making their investment decisions. For those seeking income-generating stocks, the High Dividend Yield Screener on GuruFocus Premium can be an essential tool for uncovering high-dividend yield 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.
