Understanding Elevance Health Inc's Dividend Sustainability and Growth
Elevance Health Inc (ELV, Financial) recently announced a dividend of $1.48 per share, payable on 2023-12-21, with the ex-dividend date set for 2023-12-05. 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 Elevance Health Inc's dividend performance and assess its sustainability.
What Does Elevance Health Inc Do?
Elevance Health remains one of the leading health insurers in the U.S., providing medical benefits to 48 million medical members as of June 2023. The company offers employer, individual, and government-sponsored coverage plans. Elevance differs from its peers in its unique position as the largest single provider of Blue Cross Blue Shield branded coverage, operating as the licensee for the Blue Cross Blue Shield Association in 14 states. Through acquisitions, such as the Amerigroup deal in 2012 and MMM in 2021, Elevance's reach expands beyond those states through government-sponsored programs such as Medicaid and Medicare Advantage plans, too.
A Glimpse at Elevance Health Inc's Dividend History
Elevance Health Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Elevance Health Inc has increased its dividend each year since 2011, earning it the title of a dividend achiever, a distinction awarded to companies with at least a decade of consecutive annual dividend increases.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Elevance Health Inc's Dividend Yield and Growth
As of today, Elevance Health Inc currently has a 12-month trailing dividend yield of 1.18% and a 12-month forward dividend yield of 1.23%, indicating an anticipated increase in dividend payments over the next year.
Over the past three years, Elevance Health Inc's annual dividend growth rate was 17.00%. This rate decreased slightly to 14.10% per year over a five-year period. However, looking at the past decade, Elevance Health Inc's annual dividends per share have grown at an impressive rate of 14.50%.
Considering Elevance Health Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Elevance Health Inc stock as of today is approximately 2.28%.
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, Elevance Health Inc's dividend payout ratio is 0.22.
Elevance Health Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Elevance Health Inc's profitability 8 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
The sustainability of dividends is heavily dependent on a company's growth metrics. Elevance Health Inc's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Elevance Health Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Elevance Health Inc's revenue has increased by approximately 17.20% per year on average, outperforming approximately 66.67% 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, Elevance Health Inc's earnings increased by approximately 10.30% per year on average, outperforming approximately 52.94% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 12.20%, outperforms approximately 58.33% of global competitors.
Next Steps
In conclusion, Elevance Health Inc's dividend payments, consistent dividend growth rate, moderate payout ratio, strong profitability, and solid growth metrics paint a promising picture for value investors. These indicators suggest that not only is the dividend likely sustainable, but it may also continue to grow, providing an attractive income stream. Investors should consider Elevance Health Inc's overall financial health and market position when evaluating the stock for their portfolios. For those seeking to expand their investment horizon, GuruFocus Premium users can screen for high-dividend yield stocks using 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.
