Understanding the Dividend Performance and Sustainability of Star Group LP
Star Group LP (SGU, Financial) recently announced a dividend of $0.16 per share, payable on 2023-10-30, with the ex-dividend date set for 2023-10-19. As investors anticipate this forthcoming payment, attention is also drawn to the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Star Group LP's dividend performance and evaluate its sustainability.
What Does Star Group LP Do?
Star Group LP is a company engaged in providing home heating products and services to residential and commercial customers. It offers heating and air conditioning equipment, as well as home security and plumbing services. The company also sells diesel fuel, gasoline, and home heating oil. Geographically, the company operates in the U.S.
A Glimpse at Star Group LP's Dividend History
Star Group LP has maintained a consistent dividend payment record since 2009, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 2009, earning it the status of a dividend achiever, a distinction given to companies that have increased their dividend each year for at least the past 14 years.
Breaking Down Star Group LP's Dividend Yield and Growth
As of today, Star Group LP currently has a 12-month trailing dividend yield of 5.58% and a 12-month forward dividend yield of 5.74%, indicating an anticipated increase in dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was 6.80%, which decreased to 6.70% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 6.90%.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, it's essential to examine 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, Star Group LP's dividend payout ratio is 3.10, suggesting that the company's dividend may not be sustainable.
Star Group LP's profitability rank is 8 out of 10 as of 2023-06-30, indicating good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
For dividends to be sustainable, a company must have robust growth metrics. Star Group LP's growth rank of 8 out of 10 suggests a good growth trajectory relative to its competitors. The company's revenue per share and 3-year revenue growth rate indicate a strong revenue model, with revenue increasing by approximately 15.90% per year on average, outperforming approximately 60.12% of global competitors. The company's 3-year EPS growth rate and 5-year EBITDA growth rate further showcase its potential for sustainable dividends in the long run.
Next Steps
Given Star Group LP's consistent dividend payments, impressive dividend growth rate, and robust profitability and growth metrics, the company appears to be a promising investment for dividend-focused investors. However, its relatively low payout ratio warrants further investigation to ensure the sustainability of future dividends. 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.
