Assessing the Sustainability of Prudential PLC's Upcoming Dividend
Prudential PLC (PUK, Financial) recently announced a dividend of $0.28 per share, payable on 2024-05-16, with the ex-dividend date set for 2024-04-01. 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 Prudential PLC's dividend performance and assess its sustainability.
What Does Prudential PLC Do?
Originally established as Prudential Mutual Assurance, Investment, and Loan Association in 1848, Prudential PLC has evolved significantly. Starting with life insurance and loans for the working class, Prudential expanded into Europe and North America, acquiring Jackson National Life in around 1985. The company focused on offering customizable products and building strong internal capabilities, including advanced technology and a robust salesforce.
A Glimpse at Prudential PLC's Dividend History
Prudential PLC has maintained a consistent dividend payment record since 1987, with distributions occurring bi-annually. The historical trend of the company's dividends can be analyzed through the annual Dividends Per Share chart.
Breaking Down Prudential PLC's Dividend Yield and Growth
As of today, Prudential PLC's 12-month trailing dividend yield stands at 2.00%, with the forward dividend yield projected at 2.12%, indicating potential dividend increases in the next 12 months. However, the company's dividend growth has been negative, with a three-year annual dividend growth rate of -12.90%, a five-year rate of -25.50% per year, and a ten-year rate of -9.80%. This positions the 5-year yield on cost for Prudential PLC stock at approximately 0.46%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. Prudential PLC's dividend payout ratio is currently at 0.26, which suggests a balance between distributing earnings and retaining funds for growth and stability. Despite this, Prudential PLC's profitability rank is 4 out of 10, indicating potential concerns about the sustainability of the dividend, especially considering the company's net profit track record over the past decade.
Growth Metrics: The Future Outlook
Prudential PLC's growth rank of 4 out of 10 reflects poor growth prospects, which could impact dividend sustainability. The company's revenue per share and 3-year revenue growth rate, which has decreased by an average of -30.80% per year, underperforms 96.37% of global competitors. Additionally, Prudential PLC's 3-year EPS growth rate of -11.40% per year underperforms 76.81% of global competitors, and its 5-year EBITDA growth rate of -7.10% underperforms 83.44% of global competitors, further casting doubt on the future growth necessary to sustain dividends.
Next Steps
Considering Prudential PLC's dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should exercise caution when evaluating the sustainability of the company's dividends. While the current yield may appear attractive, the negative growth rates and underperformance in key metrics suggest that the dividends could be at risk in the long term. Value investors are advised to conduct thorough research and consider the company's overall financial health and market position before making investment decisions. For those seeking high-dividend yield stocks, GuruFocus Premium offers a High Dividend Yield Screener to aid in the search for potentially more stable and sustainable dividend-paying companies.
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.
