Assessing FMX's Dividend Performance and Future Prospects
Fomento Economico Mexicano SAB de CV (FMX, Financial) recently announced a dividend of $1.13 per share, payable on 2024-04-29, with the ex-dividend date set for 2024-04-16. 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 Fomento Economico Mexicano SAB de CV's dividend performance and assess its sustainability.
What Does Fomento Economico Mexicano SAB de CV Do?
Mexico-based Fomento Economico Mexicano SAB de CV is a beverage and retail conglomerate in Central and South America. The holding company owns controlling stakes in bottler Coca-Cola Femsa (47% economic stake, 56% voting rights), in addition to operating 100%-owned retail assets, including convenience stores under the Oxxo banner, drugstores, and gas stations. The firm has digested its 15% stake in Heineken and its distribution business in 2023. Coca-Cola Femsa and the Oxxo chain made up 70% of total company revenue and around 75% of profits in 2022.
A Glimpse at Fomento Economico Mexicano SAB de CV's Dividend History
Fomento Economico Mexicano SAB de CV has maintained a consistent dividend payment record since 2015. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Fomento Economico Mexicano SAB de CV's Dividend Yield and Growth
As of today, Fomento Economico Mexicano SAB de CV currently has a 12-month trailing dividend yield of 1.67% and a 12-month forward dividend yield of 1.75%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Fomento Economico Mexicano SAB de CV's annual dividend growth rate was 48.30%. Extended to a five-year horizon, this rate increased to 52.90% per year. And over the past decade, Fomento Economico Mexicano SAB de CV's annual dividends per share growth rate stands at an impressive 44.20%.
Based on Fomento Economico Mexicano SAB de CV's dividend yield and five-year growth rate, the 5-year yield on cost of Fomento Economico Mexicano SAB de CV stock as of today is approximately 13.96%.
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 2023-12-31, Fomento Economico Mexicano SAB de CV's dividend payout ratio is 1.65, which may suggest that the company's dividend may not be sustainable.
Fomento Economico Mexicano SAB de CV's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Fomento Economico Mexicano SAB de CV's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Fomento Economico Mexicano SAB de CV'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 Fomento Economico Mexicano SAB de CV's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Fomento Economico Mexicano SAB de CV's revenue has increased by approximately 53.70% per year on average, a rate that outperforms approximately 94.53% 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, Fomento Economico Mexicano SAB de CV's earnings increased by approximately 43.80% per year on average, a rate that outperforms approximately 82.95% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 31.90%, which outperforms approximately 86.89% of global competitors, underscores its financial health and potential for future dividend increases.
Next Steps
In conclusion, Fomento Economico Mexicano SAB de CV's consistent dividend payments, impressive dividend growth rate, and strong payout ratio, alongside its robust profitability and growth metrics, paint a promising picture for value investors. While the company's dividend sustainability remains a point of analysis, its financial health and growth prospects suggest a capacity to maintain, if not increase, its dividend offerings. Investors considering FMX as a potential addition to their portfolios should weigh these factors and monitor the company's performance closely. For those seeking to expand their investment horizons, 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.
