Unraveling the Dividend History, Yield, and Growth of Mercury NZ Ltd
Mercury NZ Ltd(MGHTF, Financial) recently announced a dividend of $0.13 per share, payable on 2023-09-29, with the ex-dividend date set for 2023-09-13. 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 deep dive into Mercury NZ Ltd's dividend performance and assess its sustainability.
What Does Mercury NZ Ltd Do?
Mercury NZ (formerly Mighty River Power) generates more than 15% of New Zealand's electricity and is one of the four major electricity generators and suppliers in the country. All electricity is generated from renewable sources, which makes it one of the lowest-cost providers of electricity. The company operates nine hydro stations and five geothermal power plants in the North Island and some wind farms. Mercury sells electricity to residential and commercial customers and has the largest share of the key Auckland market.
A Glimpse at Mercury NZ Ltd's Dividend History
Mercury NZ Ltd has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Mercury NZ Ltd's Dividend Yield and Growth
As of today, Mercury NZ Ltd currently has a 12-month trailing dividend yield of 3.24% and a 12-month forward dividend yield of 4.08%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Mercury NZ Ltd's annual dividend growth rate was 9.70%. Extended to a five-year horizon, this rate decreased to 6.60% per year.
Based on Mercury NZ Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Mercury NZ Ltd stock as of today is approximately 4.46%.
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 2023-06-30, Mercury NZ Ltd's dividend payout ratio is 2.78, which may suggest that the company's dividend may not be sustainable.
Mercury NZ Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Mercury NZ Ltd's profitability 7 out of 10 as of 2023-06-30, 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. Mercury NZ Ltd'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 Mercury NZ Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Mercury NZ Ltd's revenue has increased by approximately 15.70% per year on average, a rate that outperforms approximately 60.39% 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, Mercury NZ Ltd's earnings increased by approximately -21.30% per year on average, a rate that outperforms approximately 19.26% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -10.10% outperforms approximately 17.93% of global competitors.
Next Steps
Considering Mercury NZ Ltd's consistent dividend payments, impressive growth rate, and robust profitability, it appears to be a promising choice for dividend-focused investors. However, its high payout ratio may raise concerns about the sustainability of future dividends. Therefore, potential investors should closely monitor this aspect. As always, it is crucial to consider all aspects of a company before making investment decisions.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
