Exploring the Sustainability and Growth of Thales's Dividends
Thales (THLLY, Financial) recently announced a dividend of $0.55 per share, payable on 2024-06-10, 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 Thales's dividend performance and assess its sustainability.
What Does Thales Do?
Thales is a French aerospace and defense industrial and one of Europe's largest defense contractors with EUR 18 billion in sales. The company has three reportable segments: (1) Defense and security provides sensors, mission systems, communications, and control systems to European and export defense customers; (2) Aerospace sells avionics and satellites to the civil, defense, and governmental markets; and (3) Digital identity and security provides biometric, data and identity security solutions, payments services, and the manufacturing of SIM cards.
A Glimpse at Thales's Dividend History
Thales has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Thales's Dividend Yield and Growth
As of today, Thales currently has a 12-month trailing dividend yield of 1.79% and a 12-month forward dividend yield of 2.01%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Thales's annual dividend growth rate was 96.60%. Extended to a five-year horizon, this rate decreased to 14.70% per year. And over the past decade, Thales's annual dividends per share growth rate stands at 8.20%.
Based on Thales's dividend yield and five-year growth rate, the 5-year yield on cost of Thales stock as of today is approximately 3.55%.
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, Thales's dividend payout ratio is 0.48.
Thales's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Thales's profitability 8 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of 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. Thales's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Thales's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Thales's revenue has increased by approximately 6.90% per year on average, a rate that underperforms than approximately 51.96% 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, Thales's earnings increased by approximately 25.00% per year on average, a rate that underperforms than approximately 30.18% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 5.50%, which underperforms than approximately 47.33% of global competitors.
Conclusion
With a solid track record in dividend payments, a robust payout ratio, and consistent profitability, Thales stands as a compelling option for investors seeking stable dividend income. While some growth metrics indicate challenges, the overall financial health of Thales supports the sustainability of its dividends. Investors should consider these factors in their investment strategy, especially those looking for long-term income generation.
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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.
