Exploring the Sustainability and Growth of Dividends
Charles Schwab Corp (SCHW, Financial) recently announced a dividend of $0.25 per share, payable on 2024-05-24, with the ex-dividend date set for 2024-05-09. 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 Charles Schwab Corp's dividend performance and assess its sustainability.
What Does Charles Schwab Corp Do?
Charles Schwab operates in brokerage, wealth management, banking, and asset-management businesses. The company runs a large network of brick-and-mortar brokerage branch offices, a well-established online investing website, and has mobile trading capabilities. It also operates a bank and a proprietary asset management business and offers services to independent investment advisors. The company is among the largest firms in the investment business, with over $8 trillion of client assets at the end of December 2023. Nearly all of its revenue is from the United States.
A Glimpse at Charles Schwab Corp's Dividend History
Charles Schwab Corp has maintained a consistent dividend payment record since 1989. Dividends are currently distributed on a quarterly basis. Charles Schwab Corp has increased its dividend each year since 1989. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 35 years.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Charles Schwab Corp's Dividend Yield and Growth
As of today, Charles Schwab Corp currently has a 12-month trailing dividend yield of 1.30% and a 12-month forward dividend yield of 1.30%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Charles Schwab Corp's annual dividend growth rate was 11.60%. Extended to a five-year horizon, this rate increased to 13.80% per year. And over the past decade, Charles Schwab Corp's annual dividends per share growth rate stands at an impressive 18.00%.
Based on Charles Schwab Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Charles Schwab Corp stock as of today is approximately 2.48%.
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 2024-03-31, Charles Schwab Corp's dividend payout ratio is 0.34.
Charles Schwab Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Charles Schwab Corp's profitability 6 out of 10 as of 2024-03-31, suggesting fair profitability. 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. Charles Schwab Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Charles Schwab Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Charles Schwab Corp's revenue has increased by approximately 8.10% per year on average, a rate that outperforms approximately 57.93% 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, Charles Schwab Corp's earnings increased by approximately 8.50% per year on average, a rate that outperforms approximately 51.71% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 7.70%, which outperforms approximately 42.45% of global competitors.
Next Steps
Considering Charles Schwab Corp's consistent dividend payments, impressive growth in dividend rates, sustainable payout ratios, and solid profitability and growth metrics, the company stands as a potentially robust option for dividend-seeking investors. These factors not only reassure current investors of the stability and potential growth of their investments but also attract prospective investors looking for reliable dividend stocks.
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.
