An In-Depth Look at MMC's Dividend Sustainability and Growth
Marsh & McLennan Companies Inc (MMC, Financial) recently announced a dividend of $0.71 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-04-03. 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 Marsh & McLennan Companies Inc's dividend performance and assess its sustainability.
What Does Marsh & McLennan Companies Inc Do?
Marsh & McLennan Companies Inc is a professional services firm that provides advice and solutions in the areas of risk, strategy, and human capital. The company operates through two main segments: risk and insurance services and consulting. In risk and insurance services, the firm offers services via Marsh (an insurance broker) and Guy Carpenter (a risk and reinsurance specialist). The consulting division comprises Mercer (a provider of human resource services) and Oliver Wyman (a management and economic consultancy). About half of its revenue is generated outside the U.S.
A Glimpse at Marsh & McLennan Companies Inc's Dividend History
Marsh & McLennan Companies Inc has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Marsh & McLennan Companies Inc's Dividend Yield and Growth
As of today, Marsh & McLennan Companies Inc currently has a 12-month trailing dividend yield of 1.33% and a 12-month forward dividend yield of 1.39%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Marsh & McLennan Companies Inc's annual dividend growth rate was 12.20%. Extended to a five-year horizon, this rate decreased to 10.00% per year. And over the past decade, Marsh & McLennan Companies Inc's annual dividends per share growth rate stands at 9.80%.
Based on Marsh & McLennan Companies Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Marsh & McLennan Companies Inc stock as of today is approximately 2.14%.
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 2023-12-31, Marsh & McLennan Companies Inc's dividend payout ratio is 0.33.
Marsh & McLennan Companies Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Marsh & McLennan Companies Inc's profitability 9 out of 10 as of 2023-12-31, 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. Marsh & McLennan Companies Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Marsh & McLennan Companies Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Marsh & McLennan Companies Inc's revenue has increased by approximately 10.60% per year on average, a rate that outperforms approximately 67.31% 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, Marsh & McLennan Companies Inc's earnings increased by approximately 26.20% per year on average, a rate that outperforms approximately 75.31% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 17.70%, which outperforms approximately 81.79% of global competitors, further underscores the company's strong growth prospects.
Next Steps
Considering Marsh & McLennan Companies Inc's consistent dividend payments, robust dividend growth rate, prudent payout ratio, and strong profitability and growth metrics, the company appears to be a compelling choice for value investors seeking a stable dividend income. The data suggests a balance between rewarding shareholders and investing in future growth, a strategy that could continue to benefit investors in the long term. As Marsh & McLennan Companies Inc gears up for its next dividend payment, investors may want to consider the company's track record and growth prospects when evaluating its place in their portfolios.
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.
