Assessing the Sustainability of Industrivarden AB’s Upcoming Dividend
Industrivarden AB (IDTVF) recently announced a dividend of $7.75 per share, payable on 2024-04-18, with the ex-dividend date set for 2024-04-12. 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 Industrivarden AB’s dividend performance and assess its sustainability.
What Does Industrivarden AB Do?
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Industrivarden AB is an asset management firm with a long-term, activist orientation. The company’s stated investment goal is to increase net asset value and generate returns in excess of the market cost of capital. Industrivarden makes investments in Nordic companies it can influence through corporate governance actions. It benchmarks its performance relative to the average return of the Stockholm Stock Exchange. The firm counts many public and private pension managers, foundations, and retail investors as its client base. Its security selection criteria emphasize enduring business models with promising growth prospects at an attractive valuation.
A Glimpse at Industrivarden AB’s Dividend History
Industrivarden AB has maintained a consistent dividend payment record since 2021. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Industrivarden AB’s Dividend Yield and Growth
As of today, Industrivarden AB currently has a 12-month trailing dividend yield of 1.91% and a 12-month forward dividend yield of 2.02%. This suggests an expectation of increased dividend payments over the next 12 months. Based on Industrivarden AB’s dividend yield and five-year growth rate, the 5-year yield on cost of Industrivarden AB stock as of today is approximately 1.91%.
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, Industrivarden AB’s dividend payout ratio is 0.09.
Industrivarden AB’s profitability rank, offers an understanding of the company’s earnings prowess relative to its peers. GuruFocus ranks Industrivarden AB’s profitability 3 out of 10 as of 2024-03-31, suggesting the dividend may not be sustainable. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Industrivarden AB’s growth rank of 3 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable. Revenue is the lifeblood of any company, and Industrivarden AB’s revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Industrivarden AB’s revenue has increased by approximately 49.30% per year on average, outperforming approximately 85.57% 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, Industrivarden AB’s earnings increased by approximately 47.10% per year on average, outperforming approximately 83.48% of global competitors.
Concluding Insights on Industrivarden AB’s Dividend Viability
Considering Industrivarden AB’s recent dividend announcement, investors are presented with an attractive yield and the prospect of dividend growth. However, the company’s modest profitability and growth ranks suggest a need for caution. While the low payout ratio and strong revenue and earnings growth rates are encouraging signs, investors should weigh these against the overall growth and profitability metrics. As Industrivarden AB continues to navigate the investment landscape, value investors should keep a close eye on these factors to gauge the long-term sustainability of the company’s dividends. For those seeking additional investment opportunities, 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.
This article first appeared on GuruFocus.
