Exploring the Sustainability and Growth of Nutrien Ltd's Dividends
Nutrien Ltd (NYSE:NTR) recently announced a dividend of $0.53 per share, payable on 2024-01-12, with the ex-dividend date set for 2023-12-28. 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 Nutrien Ltd's dividend performance and assess its sustainability.
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Created in 2018 as a result of the merger between PotashCorp and Agrium, Nutrien is the world's largest fertilizer producer by capacity. Nutrien produces the three main crop nutrients--nitrogen, potash, and phosphate--although its main focus is potash, where it is the global leader in installed capacity with a roughly 20% market share. The company is also the largest agricultural retailer in the United States, selling fertilizers, crop chemicals, seeds, and services directly to farm customers through its brick-and-mortar stores and online platforms.
Nutrien Ltd's Dividend Analysis
A Glimpse at Nutrien Ltd's Dividend History
Nutrien Ltd has maintained a consistent dividend payment record since 1990. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Nutrien Ltd's Dividend Yield and Growth
As of today, Nutrien Ltd currently has a 12-month trailing dividend yield of 3.63% and a 12-month forward dividend yield of 3.71%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Nutrien Ltd's annual dividend growth rate was 4.00%. Extended to a five-year horizon, this rate increased to 7.90% per year. And over the past decade, Nutrien Ltd's annual dividends per share growth rate stands at -1.50%.
Based on Nutrien Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Nutrien Ltd stock as of today is approximately 5.31%.
Nutrien 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 2023-09-30, Nutrien Ltd's dividend payout ratio is 0.47.
Nutrien Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Nutrien Ltd'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. Nutrien Ltd'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 Nutrien Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Nutrien Ltd's revenue has increased by approximately 28.10% per year on average, a rate that outperforms approximately 75.88% 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, Nutrien Ltd's earnings increased by approximately 84.40% per year on average, a rate that outperforms approximately 85.29% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 64.00%, which outperforms approximately 92.81% of global competitors.
Next Steps
In conclusion, Nutrien Ltd's upcoming dividend payment reflects its consistent commitment to shareholder returns. The company's dividend history and growth rates are indicative of a stable income stream for investors. With a prudent payout ratio and strong profitability rank, Nutrien Ltd demonstrates a balanced approach to distributing earnings while retaining enough for future growth. The robust growth metrics further solidify the foundation for ongoing dividend sustainability. Investors may find Nutrien Ltd an attractive option when seeking stocks with a reliable dividend profile, underpinned by a solid financial and operational base. Will Nutrien Ltd continue to nurture its dividend yield garden, and how will it adapt to the ever-changing economic climate? These are questions for investors to ponder as they consider adding Nutrien Ltd to their portfolios.
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.
