Assessing the Dividend Profile of a Leading Beverage Distributor
Arca Continental SAB de CV (EMBVF, Financial) recently announced a dividend of $3.8 per share, payable on 2024-04-11, with the ex-dividend date set for 2024-04-09. 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 Arca Continental SAB de CV's dividend performance and assess its sustainability.
What Does Arca Continental SAB de CV Do?
Arca Continental is a major bottler for Coca-Cola, generating 94% of sales and nearly all profits by manufacturing and distributing sodas and nonsparkling drinks under Coca-Cola brands, which it sells to retailers and foodservice providers in the US and Latin America. Food and snacks under Arca's own brands make up the rest of its business. By region, Mexico remains the largest beverage market contributing 43% of sales, followed by the US (33%), Peru (8%), Ecuador (5%), and Argentina (5%). Coca-Cola has a 20% stake in AC Beverages, the entity that holds Arca Continental SAB de CV's beverage assets in the US and Latin America.
A Glimpse at Arca Continental SAB de CV's Dividend History
Arca Continental SAB de CV has maintained a consistent dividend payment record since 2018. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Arca Continental SAB de CV's Dividend Yield and Growth
As of today, Arca Continental SAB de CV currently has a 12-month trailing dividend yield of 3.05% and a 12-month forward dividend yield of 3.35%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Arca Continental SAB de CV's annual dividend growth rate was 39.00%. Extended to a five-year horizon, this rate decreased to 30.00% per year. Based on Arca Continental SAB de CV's dividend yield and five-year growth rate, the 5-year yield on cost of Arca Continental SAB de CV stock as of today is approximately 11.32%.
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, Arca Continental SAB de CV's dividend payout ratio is 0.19.
Arca Continental SAB de CV's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Arca Continental SAB de CV's profitability 8 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. Arca Continental SAB de CV'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 Arca Continental SAB de CV's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Arca Continental SAB de CV's revenue has increased by approximately 2.10% per year on average, a rate that underperforms approximately 70.3% 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, Arca Continental SAB de CV's earnings increased by approximately 15.40% per year on average, a rate that underperforms approximately 44.09% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 9.60%, which underperforms approximately 40.3% of global competitors, still indicates a reasonable level of operational efficiency.
Next Steps
In conclusion, Arca Continental SAB de CV manifests a strong dividend profile highlighted by a consistent payment history and a promising dividend growth rate. The company's prudent payout ratio and robust profitability rank underscore its ability to sustain dividend payments. While growth metrics present a mixed picture, with revenue growth trailing some global competitors, Arca Continental SAB de CV's overall financial health remains solid. For investors seeking dividend opportunities, Arca Continental SAB de CV represents an interesting prospect, particularly for those valuing stability in their investment choices. 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.
