Exploring the Sustainability and Performance of Dividends
International Paper Co (IP, Financial) recently announced a dividend of $0.46 per share, payable on 2024-06-14, with the ex-dividend date set for 2024-05-23. 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 International Paper Co's dividend performance and assess its sustainability.
What Does International Paper Co Do?
International Paper manufactures packaging products and cellulose fibers. It accounts for roughly one third of the North American corrugated packaging market. Though it has operations in Brazil, India, and China, more than three fourths of its sales come from North America. International Paper serves a variety of end markets, including industrial, consumer products, and manufacturing.
A Glimpse at International Paper Co's Dividend History
International Paper Co has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down International Paper Co's Dividend Yield and Growth
As of today, International Paper Co currently has a 12-month trailing dividend yield of 4.43% and a 12-month forward dividend yield of 4.43%. This suggests an expectation of same dividend payments over the next 12 months. Over the past three years, International Paper Co's annual dividend growth rate was -3.40%. Extended to a five-year horizon, this rate increased to -1.40% per year. And over the past decade, International Paper Co's annual dividends per share growth rate stands at 3.60%.
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 2024-03-31, International Paper Co's dividend payout ratio is 1.02, which may suggest that the company's dividend may not be sustainable. International Paper Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks International Paper Co's profitability 7 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each 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. International Paper Co'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 International Paper Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. International Paper Co's revenue has increased by approximately 6.90% per year on average, a rate that outperforms than approximately 53.48% 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, International Paper Co's earnings increased by approximately 0.30% per year on average, a rate that outperforms than approximately 41.87% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -14.30%, which outperforms than approximately 9.33% of global competitors.
Next Steps
Considering International Paper Co's solid dividend payments, consistent growth in dividends per share, and a strategic approach to maintaining profitability and growth, the company appears poised to continue its dividend payments. However, the elevated payout ratio warrants caution. Investors should monitor this metric closely, alongside the company's profitability and growth metrics, to ensure the sustainability of future dividends. For those looking to expand their portfolio with similar opportunities, 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.
