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HP Inc's Dividend Analysis

Exploring the Sustainability and Growth Prospects of HP Inc's Dividends

HP Inc (NYSE:HPQ) recently announced a dividend of $0.28 per share, payable on 2024-07-03, with the ex-dividend date set for 2024-06-12. 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 HP Inc's dividend performance and assess its sustainability.

What Does HP Inc Do?

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HP Inc, formerly known as Hewlett-Packard, is a major player in the PC and printing markets, having focused on these areas since its 2015 split from Hewlett Packard Enterprise. HP Inc targets the commercial market, while also maintaining a presence in consumer devices and printers. The firm boasts a broad and global customer base, with only one-third of sales originating from the U.S. Importantly, HP Inc completely outsources manufacturing and relies heavily on channel partners for its sales and marketing.

HP Inc's Dividend Analysis
HP Inc's Dividend Analysis

A Glimpse at HP Inc's Dividend History

HP Inc has upheld a consistent dividend payment record since 1985, distributing dividends on a quarterly basis. Below is a chart displaying the annual Dividends Per Share to track historical trends.

HP Inc's Dividend Analysis
HP Inc's Dividend Analysis

Breaking Down HP Inc's Dividend Yield and Growth

As of today, HP Inc currently boasts a 12-month trailing dividend yield of 2.97% and a 12-month forward dividend yield of 3.06%, indicating an expectation of increased dividend payments over the next 12 months. Over the past three years, HP Inc's annual dividend growth rate was 14.20%, which slightly decreased to 14.00% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at 6.10%.

Based on HP Inc's dividend yield and five-year growth rate, the 5-year yield on cost of HP Inc stock as of today is approximately 5.72%.

HP Inc's Dividend Analysis
HP Inc'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. As of 2024-04-30, HP Inc's dividend payout ratio is 0.33, suggesting that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. HP Inc's profitability rank, at 9 out of 10 as of 2024-04-30, indicates good profitability prospects, further supported by a decade of positive net income.

Growth Metrics: The Future Outlook

Ensuring the sustainability of dividends requires robust growth metrics. HP Inc's growth rank of 9 out of 10 illustrates a promising growth trajectory relative to its competitors. The company's revenue per share and 3-year revenue growth rate of approximately 10.40% per year on average outperforms about 70.22% of global competitors. Additionally, HP Inc's 3-year EPS growth rate and 5-year EBITDA growth rate of 4.60% further solidify its capacity for sustaining dividends long-term.

Conclusion

Considering HP Inc's consistent dividend payments, robust growth rate, prudent payout ratio, and strong profitability, the company presents a compelling case for value investors focused on dividend income. The alignment of growth metrics with dividend sustainability suggests that HP Inc is well-positioned to maintain its dividend distributions in the foreseeable future. For those looking to explore further, GuruFocus Premium offers tools like the High Dividend Yield Screener to discover other high-yield 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.