Credicorp Ltd's Dividend Analysis

GuruFocus Research

17 May 2024 at 7:02 am·3-min read

Exploring the Sustainability and Growth of Credicorp Ltd's Dividends

Credicorp Ltd (NYSE:BAP) recently announced a dividend of $35 per share, payable on 2024-06-14, with the ex-dividend date set for 2024-05-17. 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 Credicorp Ltd's dividend performance and assess its sustainability.

What Does Credicorp Ltd Do?

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Credicorp Ltd is a Peruvian financial services company. It operates in four business lines including Universal Banking, Insurance and Pensions, Microfinance, and Investment Management & Advisory. Its subsidiaries include Banco de Credito del Peru, Prima AFP, and Credicorp Capital.

A Glimpse at Credicorp Ltd's Dividend History

Credicorp Ltd 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 Credicorp Ltd's Dividend Yield and Growth

As of today, Credicorp Ltd currently has a 12-month trailing dividend yield of 3.94% and a 12-month forward dividend yield of 5.35%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Credicorp Ltd's annual dividend growth rate was -5.90%. Extended to a five-year horizon, this rate increased to 0.90% per year. And over the past decade, Credicorp Ltd's annual dividends per share growth rate stands at an impressive 12.30%.

Based on Credicorp Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Credicorp Ltd stock as of today is approximately 4.12%.

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, Credicorp Ltd's dividend payout ratio is 0.40.

Credicorp Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Credicorp Ltd's profitability 6 out of 10 as of 2024-03-31, suggesting fair profitability. 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. Credicorp Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Credicorp Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Credicorp Ltd's revenue has increased by approximately 8.60% per year on average, a rate that outperforms approximately 57.22% 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, Credicorp Ltd's earnings increased by approximately 83.70% per year on average, a rate that outperforms approximately 95.23% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 7.20%, which outperforms approximately 49.32% of global competitors.

Next Steps

Considering Credicorp Ltd's consistent dividend payments, growth in dividend rates, sustainable payout ratios, solid profitability, and robust growth metrics, the company presents a compelling case for investors seeking dividend income with growth potential. For investors looking to further explore high-yield opportunities, GuruFocus Premium offers tools like 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.

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