Understanding Willis Towers Watson PLC's Dividend Sustainability and Growth
Willis Towers Watson PLC (NASDAQ:WTW) recently announced a dividend of $0.84 per share, payable on 2024-01-16, 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 Willis Towers Watson PLC's dividend performance and assess its sustainability.
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In January 2016, Towers Watson and Willis Group merged to form Willis Towers Watson, a global advisory, insurance brokerage, and solutions company. The company operates in two business segments: health, wealth, and career (its consulting operations) and risk and brokering (its brokerage operations). It has about 47,000 employees.
Willis Towers Watson PLC's Dividend Analysis
A Glimpse at Willis Towers Watson PLC's Dividend History
Willis Towers Watson PLC has maintained a consistent dividend payment record since 2003. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Willis Towers Watson PLC's Dividend Yield and Growth
As of today, Willis Towers Watson PLC currently has a 12-month trailing dividend yield of 1.39% and a 12-month forward dividend yield of 1.40%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Willis Towers Watson PLC's annual dividend growth rate was 8.10%. Extended to a five-year horizon, this rate increased to 8.70% per year. And over the past decade, Willis Towers Watson PLC's annual dividends per share growth rate stands at 0.10%.
Based on Willis Towers Watson PLC's dividend yield and five-year growth rate, the 5-year yield on cost of Willis Towers Watson PLC stock as of today is approximately 2.11%.
Willis Towers Watson PLC'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, Willis Towers Watson PLC's dividend payout ratio is 0.35.
Willis Towers Watson PLC's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Willis Towers Watson PLC's profitability 7 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. Willis Towers Watson PLC's growth rank of 7 out of 10 suggests that the company 's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Willis Towers Watson PLC's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Willis Towers Watson PLC's revenue has increased by approximately 7.10% per year on average, a rate that outperforms than approximately 59.38% 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, Willis Towers Watson PLC's earnings increased by approximately 13.30% per year on average, a rate that outperforms than approximately 68.27% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 9.10%, which outperforms than approximately 62.67% of global competitors.
With a solid track record of dividend payments, a healthy payout ratio, and robust profitability and growth metrics, Willis Towers Watson PLC stands as a compelling candidate for value investors seeking sustainable income. The company's ability to increase dividends consistently over the years, coupled with its strong financial performance, suggests that its dividend policy is not only sustainable but also poised for potential growth. As investors consider the future prospects of Willis Towers Watson PLC, the question remains: will the company continue to deliver shareholder value through its dividend strategy in the ever-changing landscape of the global advisory and insurance brokerage industry?
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.
