Assessing the Sustainability and Growth Prospects of Hays PLC's Dividend
Hays PLC (HAYPY, Financial) recently announced a dividend of $0.54 per share, payable on 2023-12-04, with the ex-dividend date set for 2023-10-05. 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 deep dive into Hays PLCs dividend performance and assess its sustainability.
Understanding Hays PLC's Business Model
Hays PLC is a British staffing and recruiting agency. The company offers recruitment services for temporary, contractor, and permanent roles in the information technology, accounting and finance, construction and property, engineering, and office support sectors. The revenue generated through fees is equally split between permanent and temporary contract types. The largest end market for Hays is Continental Europe and the rest of the world, followed by the United Kingdom and Ireland.
Tracing Hays PLC's Dividend History
Hays PLC has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Analyzing Hays PLC's Dividend Yield and Growth
As of today, Hays PLC currently has a 12-month trailing dividend yield of 8.79% and a 12-month forward dividend yield of 4.83%. This suggests an expectation of decreasing dividend payments over the next 12 months. Based on Hays PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Hays PLC stock as of today is approximately 8.79%.
Assessing Dividend Sustainability: 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, Hays PLC's dividend payout ratio is 1.25, which may suggest that the company's dividend may not be sustainable.
Hays PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Hays PLC'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 the years over the past decade, further solidifying its high profitability.
Examining Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Hays PLC'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 Hays PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Hays PLC's revenue has increased by approximately 6.40% per year on average, a rate that outperforms approximately 56.16% 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, Hays PLC's earnings increased by approximately 40.00% per year on average, a rate that outperforms approximately 79.61% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -5.10% outperforms approximately 20.93% of global competitors.
Conclusion: Weighing Hays PLC's Dividend Prospects
In conclusion, while Hays PLC's dividend yield and growth rate are impressive, the high payout ratio raises sustainability concerns. However, the company's strong profitability and growth metrics paint a promising picture for the future. Investors should closely monitor these factors to make informed decisions. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
