Assessing the Sustainability of ADT Inc's Upcoming Dividend
ADT Inc (ADT, Financial) recently announced a dividend of $0.04 per share, payable on 2024-01-09, with the ex-dividend date set for 2023-12-13. 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 ADT Inc's dividend performance and assess its sustainability.
What Does ADT Inc Do?
ADT Inc is a provider of monitored security, interactive home and business automation, and related monitoring services in the United States and Canada. It offers residential, commercial, and multi-site customers a comprehensive set of burglary, video, access control, fire and smoke alarm, and medical alert solutions. The company segments include Consumer and Small Business (CSB), Commercial, and Solar. It generates maximum revenue from the Commercial segment.
A Glimpse at ADT Inc's Dividend History
ADT Inc has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down ADT Inc's Dividend Yield and Growth
As of today, ADT Inc currently has a 12-month trailing dividend yield of 2.18% and a 12-month forward dividend yield of 2.18%. This suggests an expectation of same dividend payments over the next 12 months. Based on ADT Inc's dividend yield and five-year growth rate, the 5-year yield on cost of ADT Inc stock as of today is approximately 2.18%.
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 2023-09-30, ADT Inc's dividend payout ratio is 2.00, and this may suggest that the company's dividend may not be sustainable.
ADT Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks ADT Inc's profitability 4 out of 10 as of 2023-09-30, suggesting the dividend may not be sustainable. The company has reported net profit in 2 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. ADT Inc's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and ADT Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. ADT Inc's revenue has increased by approximately -1.30% per year on average, a rate that underperforms approximately 67.18% of global competitors.
Next Steps for Investors
In light of ADT Inc's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should approach the stock with caution. The company's dividend appears to be in a precarious position given the low profitability rank and underwhelming growth outlook. It's essential for investors to weigh the potential risks against the current dividend yield and consider how these factors align with their investment strategy. GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find more secure and sustainable dividend-paying investments.
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.
