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Lojas Renner SA's Dividend Analysis

Assessing the Sustainability of Lojas Renner SA's Dividend Payments

Lojas Renner SA (LRENY) recently announced a dividend of $0.04 per share, payable on 2024-01-16, with the ex-dividend date set for 2023-12-27. 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 delve into Lojas Renner SA's dividend performance and evaluate its long-term viability.

What Does Lojas Renner SA Do?

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Lojas Renner SA operates a chain of retail stores across Brazil, offering a variety of products under the Renner, Camicado, and Youcom brands. The Renner and Youcom stores provide customers with apparel, sports goods, accessories, and cosmetics, while Camicado specializes in houseware and home decor, including appliances, towels, linen, and kitchenware. The retail segment is the main revenue driver for Lojas Renner SA, complemented by a financial products segment that issues credit cards. The company's presence is predominantly in Brazil, with a vast network of stores catering to a diverse customer base.

Lojas Renner SA's Dividend Analysis
Lojas Renner SA's Dividend Analysis

A Glimpse at Lojas Renner SA's Dividend History

Since 2017, Lojas Renner SA has upheld a steady track record of dividend distributions, opting for a quarterly payout schedule to its shareholders. Below is a chart illustrating the historical trends for Lojas Renner SA's annual Dividends Per Share, which provides a clear view of the company's commitment to returning value to its investors over time.

Lojas Renner SA's Dividend Analysis
Lojas Renner SA's Dividend Analysis

Breaking Down Lojas Renner SA's Dividend Yield and Growth

Currently, Lojas Renner SA boasts a trailing dividend yield of 4.21% and an identical forward dividend yield, indicating market expectations of consistent dividend payouts in the forthcoming year. Over the past three years, the company's annual dividend growth rate was 10.50%, which further accelerated to 14.60% over a five-year period. Looking at the past decade, the annual growth rate of dividends per share for Lojas Renner SA stands at 7.80%. Reflecting on these figures, the 5-year yield on cost for Lojas Renner SA stock is approximately 8.32% as of today.

Lojas Renner SA's Dividend Analysis
Lojas Renner SA's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

Evaluating the sustainability of Lojas Renner SA's dividends requires an analysis of the company's payout ratio. With a current dividend payout ratio of 0.76 as of 2023-09-30, there is an indication that the dividends may not be sustainable in the long term without adjustments. However, Lojas Renner SA's profitability rank of 9 out of 10, as per GuruFocus, coupled with its consistent positive net income over the past decade, suggests strong profitability that could support future dividend payments.

Growth Metrics: The Future Outlook

Lojas Renner SA's impressive growth rank of 9 out of 10 positions it favorably among its competitors, indicating a promising growth trajectory. The company's revenue per share and 3-year revenue growth rate, averaging 6.60% annually, outperforms approximately 56.95% of global competitors. Moreover, the 3-year EPS growth rate of 12.60% per year surpasses the performance of about 52.57% of global peers. Lastly, Lojas Renner SA's 5-year EBITDA growth rate of 8.00% also stands out, outperforming nearly 47.96% of competitors worldwide.

Engaging Conclusion: Reflecting on Lojas Renner SA's Dividend Prospects

Lojas Renner SA's dividend payments, growth rate, payout ratio, profitability, and growth metrics paint a comprehensive picture for investors. The company's consistent dividend history, solid yield, and growth rates are promising, but the payout ratio warrants caution. The strong profitability and growth metrics, however, suggest a potential for continued dividend sustainability and growth. As investors contemplate their next move, it's essential to consider whether Lojas Renner SA's financial health and market position align with their investment strategy. Will the company's retail dominance in Brazil and financial services continue to fuel its dividend payments? For those seeking high-dividend yield stocks, GuruFocus Premium offers a tailored High Dividend Yield Screener to discover similar investment opportunities.

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.