Exploring the Sustainability and Growth of Dividends
Agricultural Bank of China Ltd (ACGBF) recently announced a dividend of $0.25 per share, payable on 2024-06-28, with the ex-dividend date set for 2024-05-30. 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 Agricultural Bank of China Ltd's dividend performance and assess its sustainability.
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As one of the big four banks, ABC is headquartered in Beijing. The bank evolved from a state-owned specialized bank to a state-controlled commercial bank. It listed on the Hong Kong and Shanghai Stock Exchanges in 2010. ABC operates more than 20,000-branch network in China, providing corporate and retail banking products and services, and carries out treasury operations for its own accounts or for its customers. Shareholders Central Huijin, China's state-owned investment company, and the Ministry of Finance own 37.15% and 32.47%, respectively. Corporate banking, retail banking, and wholesale banking accounted for 41%, 53%, and 6% of total revenue in the first half of 2023, respectively. Rural banking and urban banking contributed 49% and 51% of total revenue during the same period.
Agricultural Bank of China Ltd's Dividend Analysis
A Glimpse at Agricultural Bank of China Ltd's Dividend History
Agricultural Bank of China Ltd has maintained a consistent dividend payment record since 2013. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Agricultural Bank of China Ltd's Dividend Analysis
Breaking Down Agricultural Bank of China Ltd's Dividend Yield and Growth
As of today, Agricultural Bank of China Ltd currently has a 12-month trailing dividend yield of 7.35% and a 12-month forward dividend yield of 7.73%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Agricultural Bank of China Ltd's annual dividend growth rate was 6.80%. Extended to a five-year horizon, this rate decreased to 4.80% per year. And over the past decade, Agricultural Bank of China Ltd's annual dividends per share growth rate stands at 2.40%.
Based on Agricultural Bank of China Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Agricultural Bank of China Ltd stock as of today is approximately 9.29%.
Agricultural Bank of China Ltd's Dividend Analysis
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 2024-03-31, Agricultural Bank of China Ltd's dividend payout ratio is 0.30. Agricultural Bank of China Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Agricultural Bank of China Ltd's profitability 6 out of 10 as of 2024-03-31, suggesting fair profitability. 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. Agricultural Bank of China Ltd's growth rank of 6 out of 10 suggests that the company has a fair growth outlook. Revenue is the lifeblood of any company, and Agricultural Bank of China Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Agricultural Bank of China Ltd's revenue has increased by approximately 1.10% per year on average, a rate that underperforms than approximately 76.86% 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, Agricultural Bank of China Ltd's earnings increased by approximately 6.90% per year on average, a rate that underperforms than approximately 63.52% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 4.50%, which underperforms than approximately 63.39% of global competitors.
Next Steps
Considering Agricultural Bank of China Ltd's consistent dividend payments, moderate growth in dividend rates, and a stable payout ratio, the dividends appear sustainable in the near term. However, investors should keep an eye on the company's growth metrics and profitability to ensure long-term sustainability. For those interested in exploring further, 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.
