A Comprehensive Analysis of Dividend History, Yield, Growth, and Sustainability
Campbell Soup Co (CPB, Financial) recently announced a dividend of $0.37 per share, payable on 2023-10-30, with the ex-dividend date set for 2023-10-04. 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 deep dive into Campbell Soup Co's dividend performance and assess its sustainability.
Company Overview: Campbell Soup Co (CPB, Financial)
With a history that dates back around 150 years, Campbell Soup is now a leading manufacturer and marketer of branded convenience food products, most notably soup. The firm's product assortment includes well-known brands like Campbell's, Pace, Prego, Swanson, V8, and Pepperidge Farm. Following the sale of its international snacking operations in calendar 2019, the firm derives nearly all of its sales from the United States. Campbell has made a handful of acquisitions to reshape its product mix in the past several years, including the tie-up with Snyder's-Lance in March 2018, which enhanced its exposure to the faster-growing on-trend snack food aisle, complementing its Pepperidge Farm lineup.
A Glimpse at Campbell Soup Co's Dividend History
Campbell Soup Co has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. Campbell Soup Co has increased its dividend each year since 2013. 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 Campbell Soup Co's Dividend Yield and Growth
As of today, Campbell Soup Co currently has a 12-month trailing dividend yield of 3.74% and a 12-month forward dividend yield of 3.74%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Campbell Soup Co's annual dividend growth rate was 1.90%. Extended to a five-year horizon, this rate decreased to 1.40% per year. And over the past decade, Campbell Soup Co's annual dividends per share growth rate stands at 5.70%. Based on Campbell Soup Co's dividend yield and five-year growth rate, the 5-year yield on cost of Campbell Soup Co stock as of today is approximately 4.01%.
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 2023-07-31, Campbell Soup Co's dividend payout ratio is 0.52.
Campbell Soup Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Campbell Soup Co's profitability 8 out of 10 as of 2023-07-31, 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. Campbell Soup Co'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 Campbell Soup Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Campbell Soup Co's revenue has increased by approximately 2.80% per year on average, a rate that underperforms than approximately 63.9% 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, Campbell Soup Co's earnings increased by approximately 13.50% per year on average, a rate that underperforms than approximately 43.12% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 8.30%, which underperforms than approximately 44.33% of global competitors.
Conclusion
While Campbell Soup Co has a commendable history of consistent and growing dividend payments, its future sustainability hinges on its ability to maintain profitability and growth. The company's reasonable payout ratio and high profitability rank are positive indicators. However, its growth metrics, particularly its EPS and EBITDA growth rates, suggest that there may be challenges ahead. Investors should continue to monitor these factors closely while considering Campbell Soup Co's dividend performance.
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