In This Article:
Assessing the Sustainability of Prudential PLC's Upcoming Dividend
Prudential PLC (NYSE:PUK) 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?
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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.