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Brown-Forman Corp's Dividend Analysis

An In-depth Look at the Upcoming Dividend and Historical Performance

Brown-Forman Corp (NYSE:BF.B) recently announced a dividend of $0.22 per share, payable on 2024-07-01, with the ex-dividend date set for 2024-06-07. 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 Brown-Forman Corp's dividend performance and assess its sustainability.

What Does Brown-Forman Corp Do?

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Brown-Forman is a US-based manufacturer of premium distilled spirits that generates close to 70% of revenues in the whiskey category, under well-known Tennessee whiskey brand Jack Daniel's and bourbon brands Woodford Reserve and Old Forester. It also manufactures and distributes tequila, vodka, rum, gin, and premium wines. The company generates 47% of sales from its home market, while the bulk of international revenues come from Europe, Australia, and Latin America. The Brown family controls over 50% of the economic interests and a 67% voting power of the company.

Brown-Forman Corp's Dividend Analysis
Brown-Forman Corp's Dividend Analysis

A Glimpse at Brown-Forman Corp's Dividend History

Brown-Forman Corp has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Brown-Forman Corp has increased its dividend each year since 1985. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 39 years.

Below is a chart showing annual Dividends Per Share for tracking historical trends.

Brown-Forman Corp's Dividend Analysis
Brown-Forman Corp's Dividend Analysis

Breaking Down Brown-Forman Corp's Dividend Yield and Growth

As of today, Brown-Forman Corp currently has a 12-month trailing dividend yield of 1.94% and a 12-month forward dividend yield of 1.99%. This suggests an expectation of increased dividend payments over the next 12 months. Brown-Forman Corp's dividend yield of 1.94% is near a 10-year high and outperforms 36.24% of global competitors in the Beverages - Alcoholic industry, suggesting that the company's dividend yield stands out as an attractive proposition for income investors.

Over the past three years, Brown-Forman Corp's annual dividend growth rate was 6.20%. Extended to a five-year horizon, this rate decreased to 5.30% per year. And over the past decade, Brown-Forman Corp's annual dividends per share growth rate stands at 6.40%.

Based on Brown-Forman Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Brown-Forman Corp stock as of today is approximately 2.51%.

Brown-Forman Corp's Dividend Analysis
Brown-Forman Corp's Dividend Analysis

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 2024-04-30, Brown-Forman Corp's dividend payout ratio is 0.46.

Brown-Forman Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Brown-Forman Corp's profitability 9 out of 10 as of 2024-04-30, 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. Brown-Forman Corp's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.

Revenue is the lifeblood of any company, and Brown-Forman Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Brown-Forman Corp's revenue has increased by approximately 6.70% per year on average, a rate that underperforms approximately 62.56% 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, Brown-Forman Corp's earnings increased by approximately 0.80% per year on average, a rate that underperforms approximately 67.84% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of -0.60%, which underperforms approximately 77.78% of global competitors.

Conclusion

Given Brown-Forman Corp's consistent dividend growth, strong profitability, and strategic management of earnings, the company presents a compelling case for dividend investors. However, investors should also consider the relatively slower growth rates in revenue and earnings as they plan their investment strategies. 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.