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NetEase Inc's Dividend Analysis

Exploring the Sustainability and Growth of NetEase Inc's Dividends

NetEase Inc (NASDAQ:NTES) recently announced a dividend of $0.5 per share, set to be payable on 2024-06-21, with the ex-dividend date on 2024-06-06. As investors anticipate this upcoming payment, it's crucial to delve into the company's dividend history, yield, and growth rates. Utilizing data from GuruFocus, this analysis will explore NetEase Inc's dividend performance and evaluate its sustainability.

What Does NetEase Inc Do?

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Founded in 1997, NetEase is a prominent online services provider in China, offering a diverse range of services including online/mobile games, cloud music, media, advertising, email, live streaming, online education, and e-commerce. The company is renowned for developing and operating some of China's most popular PC client and mobile games. Additionally, it has forged partnerships with leading global game developers such as Blizzard Entertainment and Mojang, a subsidiary of Microsoft.

NetEase Inc's Dividend Analysis
NetEase Inc's Dividend Analysis

A Glimpse at NetEase Inc's Dividend History

Since 2013, NetEase Inc has maintained a consistent record of dividend payments, with distributions occurring on a quarterly basis. Below is a chart illustrating the annual Dividends Per Share to track historical trends.

NetEase Inc's Dividend Analysis
NetEase Inc's Dividend Analysis

Breaking Down NetEase Inc's Dividend Yield and Growth

NetEase Inc currently boasts a 12-month trailing dividend yield of 2.68% and a forward dividend yield of 2.72%, indicating expectations of increased dividend payments over the next 12 months. Over the past three years, the company's annual dividend growth rate was an impressive 21.50%, which further escalated to 28.40% per year over a five-year period. As of today, the 5-year yield on cost for NetEase Inc stock is approximately 9.35%.

NetEase Inc's Dividend Analysis
NetEase Inc's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To evaluate the sustainability of its dividends, it's important to consider NetEase Inc's dividend payout ratio, which currently stands at 0.46. This low ratio suggests that the company retains a substantial portion of its earnings, supporting both future growth and financial stability. NetEase Inc's profitability rank is a perfect 10 out of 10, reflecting its strong earnings potential relative to peers, underscored by a decade of consistent positive net income.

Growth Metrics: The Future Outlook

NetEase Inc's robust growth metrics are essential for sustaining its dividend payouts. The company's growth rank is also at the maximum of 10, indicating excellent growth prospects compared to competitors. Its revenue per share and 3-year revenue growth rate of 9.80% per year outperform 52.59% of global competitors. Additionally, the 3-year EPS growth rate of 32.40% per year and the 5-year EBITDA growth rate of 25.60% further solidify its financial health.

Conclusion

Considering NetEase Inc's consistent dividend payments, robust growth rates, low payout ratio, and strong profitability, the company's dividend policy appears sustainable for the foreseeable future. These factors make NetEase Inc an attractive option for investors seeking stable dividend income with potential for growth. For further exploration of high-dividend yield stocks, GuruFocus Premium users can utilize 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.