Assessing the Sustainability and Growth of Enel SpA's Dividends
Enel SpA (ENLAY, Financial) recently announced a dividend of $0.23 per share, payable on 2024-02-14, with the ex-dividend date set for 2024-01-22. 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 Enel SpA's dividend performance and assess its sustainability.
What Does Enel SpA Do?
Enel is a diversified energy company domiciled in Italy. Operations are concentrated in Italy, Spain, and Latin America. The firm's primary activities are electric generation, electric networks, and gas and electricity marketing. Around 50% of the company's EBITDA is derived from its regulated networks. Taking into account power sold through power purchase agreements in Latin America, around 70% of EBITDA is quasi-regulated. Enel is a giant in global power generation with 86 gigawatts of capacity, of which 39 GW is renewables, including a large share of hydro.
A Glimpse at Enel SpA's Dividend History
Enel SpA has maintained a consistent dividend payment record since 2008. Dividends are currently distributed on a bi-annual basis. Enel SpA has increased its dividend each year since 2014. 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 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Enel SpA's Dividend Yield and Growth
As of today, Enel SpA currently has a 12-month trailing dividend yield of 6.06% and a 12-month forward dividend yield of 6.40%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Enel SpA's annual dividend growth rate was 10.70%. Extended to a five-year horizon, this rate increased to 15.80% per year. And over the past decade, Enel SpA's annual dividends per share growth rate stands at an impressive 11.90%.
Based on Enel SpA's dividend yield and five-year growth rate, the 5-year yield on cost of Enel SpA stock as of today is approximately 12.62%.
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, Enel SpA's dividend payout ratio is 0.73, which may suggest that the company's dividend may not be sustainable.
Enel SpA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Enel SpA's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Enel SpA'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 Enel SpA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Enel SpA's revenue has increased by approximately 24.50% per year on average, a rate that outperforms approximately 88.66% 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, Enel SpA's earnings increased by approximately 43.90% per year on average, a rate that outperforms approximately 88.99% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.90%, which outperforms approximately 60.68% of global competitors.
Engaging Conclusion
In conclusion, Enel SpA's track record of consistent dividend payments, combined with a strong growth rate in dividends per share, positions the company as an attractive option for value investors seeking income. The robust dividend yield and yield on cost further enhance the appeal. While the payout ratio suggests caution, the company's high profitability and growth metrics indicate a capacity to sustain and potentially grow dividends. Investors should weigh these factors and consider the stability of Enel SpA's dividends in the context of their personal investment goals and risk tolerance. Will Enel SpA continue to be a reliable source of dividends for your portfolio? 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.
