Assessing the Sustainability and Growth of Flowserve Corp's Dividend
Flowserve Corp (FLS, Financial) recently announced a dividend of $0.2 per share, payable on 2023-10-06, with the ex-dividend date set for 2023-09-21. 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 deep dive into Flowserve Corps dividend performance and assess its sustainability.
Understanding Flowserve Corp's Business
Flowserve Corp is a manufacturer and aftermarket service provider of comprehensive flow control systems. It develops precision-engineered flow control equipment to monitor movement and protect customers' materials and processes. It offers an extensive range of pumps, valves, seals, and services for several global industries, including oil and gas, chemical, power generation, and water management. In addition, Flowserve has a worldwide network of Quick Response Centers to provide aftermarket equipment services. The aftermarket services help customers with installation, advanced diagnostics, repair, and retrofitting. Sales are roughly split across many global regions, with North America and Europe contributing the majority of total revenue.
A Look at Flowserve Corp's Dividend History
Flowserve Corp has maintained a consistent dividend payment record since 2007. Dividends are currently distributed on a quarterly basis. Flowserve Corp has increased its dividend each year since 2007. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 16 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dissecting Flowserve Corp's Dividend Yield and Growth
As of today, Flowserve Corp currently has a 12-month trailing dividend yield of 2.02% and a 12-month forward dividend yield of 2.02%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Flowserve Corp's annual dividend growth rate was 1.70%. Extended to a five-year horizon, this rate decreased to 1.30% per year. And over the past decade, Flowserve Corp's annual dividends per share growth rate stands at 4.40%.
Based on Flowserve Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Flowserve Corp stock as of today is approximately 2.15%.
Is Flowserve Corp's Dividend Sustainable? Examining 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 2023-06-30, Flowserve Corp's dividend payout ratio is 0.44.
Flowserve Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Flowserve Corp's profitability 7 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Flowserve Corp's Growth Metrics: A Peek into the Future
To ensure the sustainability of dividends, a company must have robust growth metrics. Flowserve Corp'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 Flowserve Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Flowserve Corp's revenue has increased by approximately -2.70% per year on average, a rate that underperforms than approximately 78.48% 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, Flowserve Corp's earnings increased by approximately -7.30% per year on average, a rate that underperforms than approximately 74.67% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 84.00%, which underperforms than approximately 0.69% of global competitors.
Conclusion
Flowserve Corp's consistent dividend payments, moderate growth rate, and reasonable payout ratio indicate a sustainable dividend. The company's profitability and growth metrics suggest that it is well-positioned to continue its dividend payments in the future. However, investors should keep a close eye on the company's revenue and earnings growth rates, as they are critical for sustaining dividends in the long run. Overall, Flowserve Corp presents an attractive opportunity for dividend-focused investors.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
