Assessing FedEx Corp's Upcoming Dividend and Its Sustainability
FedEx Corp (FDX, Financial) recently announced a dividend of $1.26 per share, payable on 2024-04-01, with the ex-dividend date set for 2024-03-08. 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 FedEx Corp's dividend performance and assess its sustainability.
What Does FedEx Corp Do?
FedEx pioneered overnight delivery in 1973 and remains the world's largest express package provider. In its fiscal 2023, which ended May 2023, FedEx derived 47% of revenue from its express division, 37% from ground, and 11% from freight, its asset-based less-than-truckload shipping segment. The remainder comes from other services, including FedEx Office, which provides document production/shipping, and FedEx Logistics, which provides global forwarding. FedEx acquired Dutch parcel delivery firm TNT Express in 2016. TNT was previously the fourth-largest global parcel delivery provider.
A Glimpse at FedEx Corp's Dividend History
FedEx Corp has maintained a consistent dividend payment record since 2002. Dividends are currently distributed on a quarterly basis. FedEx Corp has increased its dividend each year since 2008. 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 FedEx Corp's Dividend Yield and Growth
As of today, FedEx Corp currently has a 12-month trailing dividend yield of 2.00% and a 12-month forward dividend yield of 2.05%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, FedEx Corp's annual dividend growth rate was 20.90%. Extended to a five-year horizon, this rate decreased to 14.00% per year. And over the past decade, FedEx Corp's annual dividends per share growth rate stands at an impressive 23.10%.
Based on FedEx Corp's dividend yield and five-year growth rate, the 5-year yield on cost of FedEx Corp stock as of today is approximately 3.85%.
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 2023-11-30, FedEx Corp's dividend payout ratio is 0.29.
FedEx Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks FedEx Corp's profitability 8 out of 10 as of 2023-11-30, suggesting 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
To ensure the sustainability of dividends, a company must have robust growth metrics. FedEx Corp'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 FedEx Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. FedEx Corp's revenue has increased by approximately 10.10% per year on average, a rate that outperforms approximately 59.63% 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, FedEx Corp's earnings increased by approximately 39.30% per year on average, a rate that outperforms approximately 72.92% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 17.80%, which outperforms approximately 64.32% of global competitors.
Next Steps
In conclusion, FedEx Corp's upcoming dividend, consistent dividend growth, manageable payout ratio, strong profitability, and robust growth metrics paint a promising picture for value investors. The company's financial health and growth prospects suggest that it may continue to be a reliable source of dividends in the future. Investors considering FedEx Corp for its dividend income should also pay attention to industry trends, regulatory changes, and FedEx Corp's strategic initiatives to maintain its competitive edge. Would FedEx Corp fit into your dividend-focused investment strategy? 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.
