Assessing the Sustainability and Growth of Smurfit Kappa's Dividends
Smurfit Kappa Group PLC (SMFKY, Financial) recently announced a dividend of $1.29 per share, payable on 2024-05-28, with the ex-dividend date set for 2024-04-11. 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 Smurfit Kappa Group PLCs dividend performance and assess its sustainability.
What Does Smurfit Kappa Group PLC Do?
Smurfit Kappa Group PLC manufactures and sells paper-based packaging products. The company owns mills that produce containerboard, which is then shipped to the company's plants, where it is converted into corrugated packaging products. The packaging products include solid board, sack kraft paper, and folding cartons. The firm organizes itself into two segments based on geography: Europe and the Americas. The Europe segment generates the majority of the revenue. The Americas segment owns forestland in Latin America, where Smurfit Kappa harvests timber for its mills.
A Glimpse at Smurfit Kappa Group PLC's Dividend History
Smurfit Kappa Group PLC has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a bi-annual basis. Smurfit Kappa Group PLC has increased its dividend each year since 2014. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Smurfit Kappa Group PLC's Dividend Yield and Growth
As of today, Smurfit Kappa Group PLC currently has a 12-month trailing dividend yield of 3.26% and a 12-month forward dividend yield of 3.52%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Smurfit Kappa Group PLC's annual dividend growth rate was 9.10%. Extended to a five-year horizon, this rate stayed the same. And over the past decade, Smurfit Kappa Group PLC's annual dividends per share growth rate stands at an impressive 14.40%.
Based on Smurfit Kappa Group PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Smurfit Kappa Group PLC stock as of today is approximately 5.04%.
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, Smurfit Kappa Group PLC's dividend payout ratio is 0.40.
Smurfit Kappa Group PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Smurfit Kappa Group PLC's profitability 7 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. Smurfit Kappa 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 Smurfit Kappa Group PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Smurfit Kappa Group PLC's revenue has increased by approximately 7.00% per year on average, a rate that outperforms approximately 52.86% 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, Smurfit Kappa Group PLC's earnings increased by approximately 13.80% per year on average, a rate that outperforms approximately 63.5% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.30%, which outperforms approximately 56.36% of global competitors.
Conclusion: Evaluating Smurfit Kappa Group PLC's Dividend Prospects
In conclusion, Smurfit Kappa Group PLC's consistent dividend payments, impressive growth rate, manageable payout ratio, and solid profitability and growth metrics, all contribute to the attractiveness of its dividend profile for value investors. The company's ability to maintain a balance between rewarding shareholders and investing in future growth is commendable. As Smurfit Kappa Group PLC continues to navigate the dynamic packaging industry, the robustness of its financial health and the strategic initiatives it undertakes will be crucial factors in sustaining its dividend growth trajectory. For those seeking to diversify their portfolios with dividend-paying stocks, Smurfit Kappa Group PLC presents a compelling case worth considering. Will Smurfit Kappa Group PLC continue its streak of dividend growth, and how will it adapt to the evolving demands of the packaging sector? These are questions investors should ponder as they assess the company's long-term value proposition.
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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.
