Yahoo Finance Ally Financial Inc's Dividend Analysis
Assessing the Sustainability of Ally Financial's Upcoming Dividend
Ally Financial Inc (NYSE:ALLY) recently announced a dividend of $0.3 per share, payable on 2024-05-15, with the ex-dividend date set for 2024-04-30. 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 Ally Financial Inc's dividend performance and assess its sustainability.
What Does Ally Financial Inc Do?
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Formerly the captive financial arm of General Motors, Ally Financial became an independent publicly traded firm in 2014 and is one of the largest consumer auto lenders in the country. While the firm has expanded its product offerings over time, it remains primarily focused on auto lending with more than 70% of its loan book in consumer auto loans and dealer financing. Ally also offers auto insurance, commercial loans, credit cards, and holds a portfolio of mortgage debt, giving the bank a diversified business model, which includes brokerage services.
A Glimpse at Ally Financial Inc's Dividend History
Ally Financial Inc has maintained a consistent dividend payment record since 2016. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ally Financial Inc's Dividend Yield and Growth
As of today, Ally Financial Inc currently has a 12-month trailing dividend yield of 3.05% and a 12-month forward dividend yield of 3.05%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Ally Financial Inc's annual dividend growth rate was 16.40%. Extended to a five-year horizon, this rate increased to 17.60% per year. Based on Ally Financial Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Ally Financial Inc stock as of today is approximately 6.86%.
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, Ally Financial Inc's dividend payout ratio is 0.45.
Ally Financial Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ally Financial Inc's profitability 6 out of 10 as of 2024-03-31, suggesting fair profitability. 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. Ally Financial Inc'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 Ally Financial Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ally Financial Inc's revenue has increased by approximately 14.40% per year on average, a rate that outperforms approximately 67.48% 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, Ally Financial Inc's earnings increased by approximately -1.50% per year on average, a rate that outperforms approximately 33.16% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 4.60%, which outperforms approximately 46.53% of global competitors.
Next Steps
Considering Ally Financial Inc's consistent dividend payments, robust dividend growth rate, moderate payout ratio, fair profitability, and growth metrics, the company stands as a potentially attractive option for value investors focused on dividend income. While past performance is indicative, it's crucial to monitor ongoing financial health and market conditions that may affect future payouts. Investors should continue to research Ally Financial Inc's financial stability and the broader market trends to make informed decisions.
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.
