Yahoo Finance Sodexo's Dividend Analysis
Insights into Sodexo's Upcoming Dividend Payout and Historical Performance
Sodexo (SDXAY) recently announced a dividend of $5.86 per share, payable on 2024-03-14, with the ex-dividend date set for 2024-03-06. 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 Sodexo's dividend performance and assess its sustainability.
What Does Sodexo Do?
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Sodexo is one of the largest food service companies globally, operating in more than 80 countries with annual sales of more than EUR 20 billion. Sodexo's model stems from operating on-premises catering facilities, rather than centralized industrial kitchens. While food services remains the largest business segment (58% of revenue in 2022), the company has actively pursued a strategy of diversifying its business activities into other areas, such as facilities-management services, which now represents more than a third of group revenue.
A Glimpse at Sodexo's Dividend History
Sodexo has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Sodexo's Dividend Yield and Growth
As of today, Sodexo currently has a 12-month trailing dividend yield of 3.06% and a 12-month forward dividend yield of 3.06%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Sodexo's annual dividend growth rate was -6.10%. Based on Sodexo's dividend yield and five-year growth rate, the 5-year yield on cost of Sodexo stock as of today is approximately 3.06%.
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 2023-08-31, Sodexo's dividend payout ratio is 0.58.
Sodexo's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Sodexo's profitability 7 out of 10 as of 2023-08-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Sodexo's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Sodexo's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Sodexo's revenue has increased by approximately 5.50% per year on average, a rate that outperforms approximately 50.1% of global competitors.
Next Steps for Investors
With a consistent dividend history, a stable yield, and a moderate payout ratio, Sodexo presents itself as a potentially attractive option for income-focused investors. The company's profitability and growth metrics further bolster the case for its dividend sustainability. However, the negative dividend growth rate over the past three years warrants a closer look to understand the underlying causes and to assess the likelihood of future dividend growth. As always, investors should consider their own financial goals and risk tolerance when evaluating Sodexo as a part of their investment portfolio. For those interested in exploring further, 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.
