Yahoo Finance Westpac Banking Corp's Dividend Analysis
Exploring the Sustainability and Growth of Dividends
Westpac Banking Corp (WEBNF) recently announced a dividend of $0.15 per share, payable on 2024-06-25, with the ex-dividend date set for 2024-05-09. 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 Westpac Banking Corp's dividend performance and assess its sustainability.
What Does Westpac Banking Corp Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
Westpac is Australia's oldest bank and financial services group, with a significant franchise in Australia and New Zealand in the consumer, small business, corporate, and institutional sectors, in addition to its major presence in wealth management. Westpac is among a handful of banks around the globe currently retaining very high credit ratings. The bank benefits from a large national branch network and significant market share, particularly in home loans and retail deposits.
A Glimpse at Westpac Banking Corp's Dividend History
Westpac Banking Corp has maintained a consistent dividend payment record since 2019. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Westpac Banking Corp's Dividend Yield and Growth
As of today, Westpac Banking Corp currently has a 12-month trailing dividend yield of 5.23% and a 12-month forward dividend yield of 5.44%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Westpac Banking Corp's annual dividend growth rate was 18.80%, extended to a five-year horizon, this rate decreased to -8.00% per year. And over the past decade, Westpac Banking Corp's annual dividends per share growth rate stands at -5.80%.
Based on Westpac Banking Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Westpac Banking Corp stock as of today is approximately 3.45%.
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, Westpac Banking Corp's dividend payout ratio is 0.77, which may suggest that the company's dividend may not be sustainable. Westpac Banking Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Westpac Banking Corp's profitability 4 out of 10 as of 2024-03-31, suggesting the dividend may not be sustainable. 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. Westpac Banking Corp's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Westpac Banking Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Westpac Banking Corp's revenue has increased by approximately -0.20% per year on average, a rate that underperforms than approximately 79.99% 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, Westpac Banking Corp's earnings increased by approximately 24.20% per year on average, a rate that underperforms than approximately 31.41% of global competitors. Lastly, the company's 5-year EBITDA growth rate of -2.30%, which underperforms than approximately 84.65% of global competitors.
Conclusion
Given Westpac Banking Corp's historical dividend performance, current yield, and growth rates, investors might remain cautiously optimistic about the sustainability of its dividends. However, the company's moderate profitability and growth metrics suggest that careful monitoring of its financial health and market position will be crucial. 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.
This article first appeared on GuruFocus.
