Delving into Bayer AG's Dividend Sustainability and Growth
Bayer AG (BAYRY, Financial) recently announced a dividend of $0.03 per share, payable on 2024-05-13, with the ex-dividend date set for 2024-04-29. 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 Bayer AG's dividend performance and assess its sustainability.
What Does Bayer AG Do?
Bayer is a German healthcare and agriculture conglomerate. Healthcare provides close to half of the company's sales and includes pharmaceutical drugs as well as vitamins and other consumer healthcare products. The firm also has a crop science business that includes seeds, pesticides, herbicides, and fungicides, which was expanded through the acquisition of Monsanto.
A Glimpse at Bayer AG's Dividend History
Bayer AG has maintained a consistent dividend payment record since 1996. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Bayer AG's Dividend Yield and Growth
As of today, Bayer AG currently has a 12-month trailing dividend yield of 8.93% and a 12-month forward dividend yield of 0.40%. This suggests an expectation of decreased dividend payments over the next 12 months.
Over the past three years, Bayer AG's annual dividend growth rate was -5.00%. Extended to a five-year horizon, this rate decreased to -5.70% per year. And over the past decade, Bayer AG's annual dividends per share growth rate stands at 1.00%.
Based on Bayer AG's dividend yield and five-year growth rate, the 5-year yield on cost of Bayer AG stock as of today is approximately 6.66%.
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, Bayer AG's dividend payout ratio is 11.69, which may suggest that the company's dividend is sustainable.
Bayer AG's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Bayer AG's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 8 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. Bayer AG'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 Bayer AG's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Bayer AG's revenue has increased by approximately 4.80% per year on average, a rate that underperforms approximately 55.64% 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, Bayer AG's earnings increased by approximately 8.50% per year on average, a rate that underperforms approximately 54.14% of global competitors.
Next Steps
In conclusion, Bayer AG's upcoming dividend payment, historical dividend consistency, and a moderate payout ratio paint a picture of a potentially sustainable dividend. However, the expected decrease in the forward dividend yield and negative growth rates in dividends per share over the last few years raise questions about long-term dividend growth. Despite this, the company's strong profitability rank and growth prospects suggest that it may be able to maintain its dividend payments. Investors should consider these factors alongside their investment strategy and risk appetite. For those seeking dividend-paying stocks, 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.
