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Novonesis AS's Dividend Analysis

Assessing the Sustainability of Novonesis AS's Upcoming Dividend

Novonesis AS (NVZMY) recently announced a dividend of $0.29 per share, payable on 2024-05-20, with the ex-dividend date set for 2024-05-01. 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 Novonesis AS's dividend performance and assess its sustainability.

What Does Novonesis AS Do?

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Novonesis AS, formerly known as Novozymes and Chr. Hansen, was formed in 2024 through a merger. The company is a global leader in industrial enzymes and microbial solutions, boasting a near-50% market share in both sectors. Novonesis AS caters to a diverse range of industries, including household care, food and beverages, bioenergy, agriculture and feed, technical and pharmaceuticals. The firm's biological solutions aim to enhance customer value by boosting yield efficiency and performance, and by promoting energy savings and waste reduction. With its headquarters in Denmark, Novonesis AS employs approximately 10,000 people and operates over 30 research and development centers and 23 manufacturing sites worldwide.

Novonesis AS's Dividend Analysis
Novonesis AS's Dividend Analysis

A Glimpse at Novonesis AS's Dividend History

Novonesis AS has upheld a steady dividend payment track record since 2004, with distributions occurring bi-annually. The company has also managed to increase its dividend annually since 2004, earning it the title of a dividend achievera distinction awarded to companies that have raised their dividends for at least 20 consecutive years. Below is a chart illustrating the annual Dividends Per Share to track historical trends.

Novonesis AS's Dividend Analysis
Novonesis AS's Dividend Analysis

Breaking Down Novonesis AS's Dividend Yield and Growth

As of today, Novonesis AS boasts a 12-month trailing dividend yield of 1.06% and a 12-month forward dividend yield of 1.59%. This indicates an expectation of increased dividend payments over the next year. In the past three years, Novonesis AS's annual dividend growth rate was a robust 24.80%. This growth rate moderates to 13.30% when viewed over a five-year span. Over the last decade, the company's annual dividends per share have grown at an impressive rate of 13.10%. Factoring in Novonesis AS's dividend yield and five-year growth rate, the 5-year yield on cost for Novonesis AS stock is approximately 1.98% as of today.

Novonesis AS's Dividend Analysis
Novonesis AS's Dividend Analysis

The Sustainability Question: Payout Ratio and Profitability

To gauge the sustainability of the dividend, it's crucial to consider the company's payout ratio. Novonesis AS's dividend payout ratio as of December 31, 2023, is 0.85. A higher ratio could indicate that the company's dividends are at risk of being unsustainable. However, Novonesis AS's profitability rank of 9 out of 10 suggests strong profitability prospects. The company has also reported consistent positive net income for each year over the past decade, reinforcing its financial stability.

Growth Metrics: The Future Outlook

For dividends to be sustainable, a company must demonstrate strong growth metrics. Novonesis AS's growth rank of 9 out of 10 indicates a positive growth trajectory compared to its competitors. The company's revenue per share and 3-year revenue growth rate suggest a robust revenue model, with an average annual increase of approximately 9.00%, outperforming roughly 50.24% of global competitors. Novonesis AS's 3-year EPS growth rate of about 6.50% per year outperforms approximately 48.5% of global competitors. Additionally, the company's 5-year EBITDA growth rate of 3.00% outperforms approximately 37.95% of global competitors, further cementing its growth potential.

Next Steps

In conclusion, Novonesis AS's upcoming dividend, consistent dividend growth rate, and a payout ratio that may raise some concerns, are balanced by the company's strong profitability and growth metrics. These factors together provide a comprehensive picture of the dividend's sustainability. Value investors considering Novonesis AS for its dividend income should weigh these aspects alongside the company's overall financial health and market position. With a promising growth outlook and a history of rewarding shareholders, Novonesis AS remains an interesting case study for dividend enthusiasts. For further exploration of high-dividend yield opportunities, 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.