Assessing the Sustainability of Ambev SA's Upcoming Dividend
Ambev SA (ABEV, Financial) recently announced a dividend of $0.15 per share, payable on 2024-01-08, with the ex-dividend date set for 2023-12-22. 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 Ambev SAs dividend performance and assess its sustainability.
What Does Ambev SA Do?
Ambev is the largest brewer in Latin America and the Caribbean and is Anheuser-Busch InBev's subsidiary in the region. It produces, distributes, and sells beer and PepsiCo products in Brazil and other Latin American countries and owns Argentina's largest brewer, Quinsa. Ambev was formed in 1999 through the merger of Brazil's two largest beverage companies, Brahma and Antarctica. In 2004, Ambev combined with Canadian brewer Labatt, giving Interbrew (now AB InBev) a controlling interest of 61.8% as at the end of 2022.
A Glimpse at Ambev SA's Dividend History
Ambev SA has maintained a consistent dividend payment record since 2005. Dividends are currently distributed on a yearly basis.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Ambev SA's Dividend Yield and Growth
As of today, Ambev SA currently has a 12-month trailing dividend yield of 4.98% and a 12-month forward dividend yield of 5.09%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Ambev SA's annual dividend growth rate was 15.80%. Extended to a five-year horizon, this rate decreased to 6.50% per year. And over the past decade, Ambev SA's annual dividends per share growth rate stands at 1.90%.
Based on Ambev SA's dividend yield and five-year growth rate, the 5-year yield on cost of Ambev SA stock as of today is approximately 6.82%.
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, Ambev SA's dividend payout ratio is 0.80, which may suggest that the company's dividend may not be sustainable.
Ambev SA's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Ambev SA's profitability 9 out of 10 as of 2023-09-30, 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. Ambev SA's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Ambev SA's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Ambev SA's revenue has increased by approximately 15.30% per year on average, a rate that outperforms approximately 78.17% 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, Ambev SA's earnings increased by approximately 6.90% per year on average, a rate that outperforms approximately 43.43% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 15.30%, which outperforms approximately 68.33% of global competitors.
Next Steps
Reflecting on Ambev SA's dividend payments, the company has demonstrated a history of consistent dividend payouts with a notable growth rate. While the dividend payout ratio may raise questions about sustainability, the company's strong profitability rank and positive net income history provide a counterbalance. Growth metrics, including revenue and earnings growth rates, also suggest a healthy trajectory for future dividend sustainability. Investors should consider these factors in their overall analysis of Ambev SA's dividend prospects.
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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.
