Assessing the Upcoming Dividend Payment and the Company's Financial Health
Ecopetrol SA (EC, Financial) recently announced a dividend of $0.8 per share, payable on 2024-04-10, with the ex-dividend date set for 2024-04-04. 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 Ecopetrol SA's dividend performance and assess its sustainability.
What Does Ecopetrol SA Do?
Ecopetrol SA is a vertically integrated oil company with operations in Latin America and the United States Gulf Coast. Based out of Colombia, the company explores, develops, and conducts production activities in various countries. Ecopetrol works as the primary operator or partner in a joint venture, in a host of assets held onshore and offshore. Along with production, the company refines and markets crude oils and byproducts produced from its fields. Crude products are moved by Ecopetrol through a series of pipelines throughout Colombia, along with a network of third-party production centers and facilities.
A Glimpse at Ecopetrol SA's Dividend History
Ecopetrol SA has maintained a consistent dividend payment record since 2017, distributing dividends on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ecopetrol SA's Dividend Yield and Growth
As of today, Ecopetrol SA currently has a 12-month trailing dividend yield of 20.67% and a 12-month forward dividend yield of 25.18%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Ecopetrol SA's annual dividend growth rate was 12.90%. Extended to a five-year horizon, this rate increased to 21.70% per year. Based on Ecopetrol SA's dividend yield and five-year growth rate, the 5-year yield on cost of Ecopetrol SA stock as of today is approximately 55.18%.
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, Ecopetrol SA's dividend payout ratio is 1.47, which may suggest that the company's dividend may not be sustainable.
Ecopetrol SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ecopetrol SA's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 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. Ecopetrol SA's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Ecopetrol SA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ecopetrol SA's revenue has increased by approximately 30.70% per year on average, a rate that outperforms approximately 77.62% 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, Ecopetrol SA's earnings increased by approximately 31.60% per year on average, a rate that outperforms approximately 64.14% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.40%, which outperforms approximately 68.51% of global competitors.
Investor Considerations for Ecopetrol SA's Dividends
In conclusion, Ecopetrol SA's upcoming dividend payment reflects a history of consistent shareholder returns. The company's robust dividend yield and growth rate paint a picture of an attractive investment for those seeking income. However, the high payout ratio raises questions about long-term sustainability that investors should monitor closely. With a strong profitability rank and solid growth metrics, Ecopetrol SA appears to be in a good position to continue its dividend payments. Yet, value investors may want to consider the balance between dividend returns and the company's ability to reinvest in future growth. Will Ecopetrol SA's dividends continue to reward investors while maintaining the necessary capital for sustained success?
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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.
