Exploring the Sustainability and Growth of Avery Dennison's Dividends
Avery Dennison Corp (AVY, Financial) recently announced a dividend of $0.88 per share, payable on 2024-06-20, with the ex-dividend date set for 2024-06-05. 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 Avery Dennison Corp's dividend performance and assess its sustainability.
What Does Avery Dennison Corp Do?
Avery Dennison manufactures pressure-sensitive materials, merchandise tags, and labels. The company also runs a specialty converting business that produces radio-frequency identification, or RFID, inlays and labels. Avery Dennison draws a significant amount of revenue from outside the United States, with international operations accounting for the majority of total sales.
A Glimpse at Avery Dennison Corp's Dividend History
Avery Dennison Corp has maintained a consistent dividend payment record since 1986, distributing dividends quarterly. The company has increased its dividend annually since 2010, earning it the status of a dividend achiever—a recognition given to companies that have increased their dividends annually for at least the past 14 years. Below is a chart showcasing the annual Dividends Per Share to track historical trends.
Breaking Down Avery Dennison Corp's Dividend Yield and Growth
Avery Dennison Corp currently has a 12-month trailing dividend yield of 1.43% and a 12-month forward dividend yield of 1.56%, indicating an expected increase in dividend payments over the next year. Over the past three years, Avery Dennison Corp's annual dividend growth rate was 10.50%, with a five-year growth rate of 9.60% per year. Over the past decade, the annual dividends per share growth rate stands at 10.60%. The 5-year yield on cost of Avery Dennison Corp stock as of today is approximately 2.26%.
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. As of 2024-03-31, Avery Dennison Corp's dividend payout ratio is 0.38, suggesting a healthy balance between distributing earnings and retaining funds for future growth. The company's profitability rank of 8 out of 10 as of 2024-03-31 indicates strong earnings prowess relative to its peers, with consistent positive net income reported each year over the past decade.
Growth Metrics: The Future Outlook
Avery Dennison Corp's robust growth rank of 8 out of 10 underscores a promising growth trajectory. The company's revenue per share and 3-year revenue growth rate of approximately 7.60% per year outperform about 56.18% of global competitors. Furthermore, the 3-year EPS growth rate of 3.70% per year and the 5-year EBITDA growth rate of 12.50% also showcase the company's capability to sustain dividends over the long run.
Conclusion
Considering Avery Dennison Corp's consistent dividend payments, robust growth rates, and a healthy payout ratio, the company appears well-positioned to continue rewarding its shareholders with sustainable dividends. The strong profitability and promising growth metrics further reinforce the potential for ongoing dividend increases. For investors seeking dividend growth stocks, Avery Dennison presents a compelling case. GuruFocus Premium users can explore further 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.
