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Cochlear Ltd's Dividend Analysis

Exploring the Dividend Profile of Cochlear Ltd (CHEOY)

Cochlear Ltd (CHEOY) recently announced a dividend of $0.66 per share, payable on 2024-04-30, with the ex-dividend date set for 2024-03-21. 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 Cochlear Ltd's dividend performance and assess its sustainability.

What Does Cochlear Ltd Do?

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Cochlear Ltd is the leading cochlear implant device manufacturer with around 60% global market share. Developed markets contribute 80% of group revenue where cochlear implants are the standard of care for children with severe to profound hearing loss. The company also actively targets the growing cohort of seniors in developed markets. Tender-oriented emerging markets contribute the remaining 20% of group revenue. Main products include cochlear implants, bone-anchored hearing aids, and associated sound processors. In fiscal 2020, 49% of revenue came from the Americas, 35% from Europe, the Middle East, and Africa, and 16% from the Asia-Pacific segment.

Cochlear Ltd's Dividend Analysis
Cochlear Ltd's Dividend Analysis

A Glimpse at Cochlear Ltd's Dividend History

Cochlear Ltd has maintained a consistent dividend payment record since 2010. Dividends are currently distributed on a bi-annually basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Cochlear Ltd's Dividend Yield and Growth

As of today, Cochlear Ltd currently has a 12-month trailing dividend yield of 1.00% and a 12-month forward dividend yield of 1.12%. This suggests an expectation of increased dividend payments over the next 12 months.

Over the past three years, Cochlear Ltd's annual dividend growth rate was 19.70%. Extended to a five-year horizon, this rate decreased to -0.80% per year. And over the past decade, Cochlear Ltd's annual dividends per share growth rate stands at -0.50%. Based on Cochlear Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Cochlear Ltd stock as of today is approximately 0.96%.

Cochlear Ltd's Dividend Analysis
Cochlear 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 2023-12-31, Cochlear Ltd's dividend payout ratio is 0.62.

Cochlear Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Cochlear Ltd's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported net profit in 9 years out of past 10 years.

Growth Metrics: The Future Outlook

To ensure the sustainability of dividends, a company must have robust growth metrics. Cochlear Ltd'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 Cochlear Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Cochlear Ltd's revenue has increased by approximately 9.90% per year on average, a rate that outperforms approximately 55.88% of global competitors.

Concluding Insights on Cochlear Ltd's Dividend Dynamics

In conclusion, Cochlear Ltd's upcoming dividend, consistent payment history, and a moderate yield present an attractive proposition for income-focused investors. While the dividend growth rate has experienced fluctuations, the company's payout ratio and profitability suggest a balance between rewarding shareholders and retaining earnings for growth. The growth rank and revenue trends further reinforce Cochlear Ltd's position in the market, potentially offering a sustainable dividend outlook. Investors seeking to diversify their portfolio with dividend-paying stocks may find Cochlear Ltd an interesting candidate, especially considering its dominant market position and financial health. 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.

This article first appeared on GuruFocus.