Assessing the Sustainability of Sanlam Ltd's Upcoming Dividend
Sanlam Ltd (SLLDY, Financial) recently announced a dividend of $0.43 per share, payable on 2024-04-15, 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 Sanlam Ltd's dividend performance and assess its sustainability.
What Does Sanlam Ltd Do?
Sanlam Ltd sells insurance products and provides investment and wealth management services. Its operating segments include Sanlam Life and Savings, further divided into SA Retail Affluent provides life insurance and investment solutions to the middle and upper level of the market, SA Retail Mass provides life insurance and investment solutions to the entry level market; and Sanlam Corporate provides employee benefits services, group risk and investment services to retirement funds and corporates; Sanlam Emerging Markets incorporates Sanlam's businesses outside of South Africa, except for Sanlam UK and the smaller businesses in Australia; Sanlam Investment Group incorporates investment and wealth management businesses; and Santam being Sanlam's general insurance provider in South Africa.
A Glimpse at Sanlam Ltd's Dividend History
Sanlam Ltd has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Sanlam Ltd's Dividend Yield and Growth
As of today, Sanlam Ltd currently has a 12-month trailing dividend yield of 5.36% and a 12-month forward dividend yield of 5.82%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Sanlam Ltd's annual dividend growth rate was 2.50%. Extended to a five-year horizon, this rate increased to 3.40% per year. And over the past decade, Sanlam Ltd's annual dividends per share growth rate stands at 7.10%.
Based on Sanlam Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Sanlam Ltd stock as of today is approximately 6.34%.
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, Sanlam Ltd's dividend payout ratio is 0.67.
Sanlam Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sanlam Ltd's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. 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. Sanlam Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Sanlam Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sanlam Ltd's revenue has increased by approximately 14.80% per year on average, a rate that outperforms approximately 77.61% 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, Sanlam Ltd's earnings increased by approximately 15.60% per year on average, a rate that outperforms approximately 61.62% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 3.20%, which outperforms approximately 41.14% of global competitors.
Investing in Sanlam Ltd's Dividend Future
In conclusion, Sanlam Ltd's upcoming dividend, consistent dividend history, and growing yield are attractive to investors seeking steady income. The company's moderate payout ratio and profitability rank indicate a balance between rewarding shareholders and reinvesting for growth. With solid growth metrics and a positive outlook, Sanlam Ltd appears well-positioned to sustain its dividend payments. Investors should consider these factors in their decision-making process, as they reflect the company's potential for long-term value creation. For those looking 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.
