Yahoo Finance Solvay SA's Dividend Analysis
Assessing the Sustainability and Growth of Solvay SA's Dividends
Solvay SA (SLVYY) recently announced a dividend of $0.17 per share, payable on 2024-01-31, with the ex-dividend date set for 2024-01-12. 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 Solvay SA's dividend performance and assess its sustainability.
What Does Solvay SA Do?
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Solvay is a Belgium-based producer of chemicals, plastics, and composites. The company has a top-three market position for nearly all of its products. Key business segments include materials, chemicals, and solutions. High-value products include aerospace composites and specialty polymers while traditional chemical products include soda ash and hydrogen peroxide. Geographical exposure is relatively balanced, with Europe, North America, and Asia each contributing a third of sales.
A Glimpse at Solvay SA's Dividend History
Solvay SA has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Solvay SA's Dividend Yield and Growth
As of today, Solvay SA currently has a 12-month trailing dividend yield of 3.18% and a 12-month forward dividend yield of 3.23%. This suggests an expectation of increased dividend payments over the next 12 months.
Solvay SA's dividend yield of 3.18% is near a 10-year low and underperforms than that of global competitors in the Chemicals industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Solvay SA's annual dividend growth rate was 0.90%. Extended to a five-year horizon, this rate increased to 1.90% per year. And over the past decade, Solvay SA's annual dividends per share growth rate stands at 3.10%.
Based on Solvay SA's dividend yield and five-year growth rate, the 5-year yield on cost of Solvay SA stock as of today is approximately 3.49%.
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 2023-09-30, Solvay SA's dividend payout ratio is 0.40.
Solvay SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Solvay SA's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Solvay SA'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 Solvay SA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Solvay SA's revenue has increased by approximately 12.40% per year on average, a rate that outperforms approximately 58.71% 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, Solvay SA's earnings increased by approximately 33.20% per year on average, a rate that outperforms approximately 72.66% of global competitors.
Engaging Conclusion
In conclusion, Solvay SA's consistent dividend history, combined with a moderate payout ratio and robust profitability, paints a promising picture for dividend sustainability. While the dividend yield is currently lower than some industry peers, the company's solid growth metrics indicate potential for future dividend increases. For value investors seeking companies with a stable dividend policy and the potential for growth, Solvay SA warrants consideration. Will Solvay SA's strategic initiatives and market position enable it to continue rewarding shareholders with attractive dividends? That remains a key question for investors to ponder as they assess the company's long-term value proposition.
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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.
