Yahoo Finance Flowers Foods Inc's Dividend Analysis
Understanding the Dividend Strategy and Its Sustainability
Flowers Foods Inc recently announced a dividend of $0.24 per share, payable on 2024-06-20, with the ex-dividend date set for 2024-06-06. 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 Flowers Foods Inc's dividend performance and assess its sustainability.
What Does Flowers Foods Inc Do?
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Flowers Foods Inc is an American company producing bakery food for retail and foodservice across the United States. The product portfolio includes fresh breads, buns, rolls, snack cakes, and tortillas. The company distributes to supermarkets, convenience stores, and restaurants. The key brands are Nature's Own, Whitewheat, Cobblestone Bread, Wonder, Dave's Killer Bread, Canyon Bakehouse, Mrs. Freshley's, and Tastykake.
A Glimpse at Flowers Foods Inc's Dividend History
Flowers Foods Inc has maintained a consistent dividend payment record since 2002. Dividends are currently distributed on a quarterly basis. Flowers Foods Inc has increased its dividend each year since 2003. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 21 years.
Breaking Down Flowers Foods Inc's Dividend Yield and Growth
As of today, Flowers Foods Inc currently has a 12-month trailing dividend yield of 3.97% and a 12-month forward dividend yield of 4.14%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Flowers Foods Inc's annual dividend growth rate was 4.80%. Extended to a five-year horizon, this rate increased to 5.10% per year. And over the past decade, Flowers Foods Inc's annual dividends per share growth rate stands at 7.60%.
Based on Flowers Foods Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Flowers Foods Inc stock as of today is approximately 5.09%.
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, Flowers Foods Inc's dividend payout ratio is 1.42, which may suggest that the company's dividend may not be sustainable.
Flowers Foods Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Flowers Foods Inc's profitability 7 out of 10 as of 2024-03-31, 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. Flowers Foods Inc'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 Flowers Foods Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Flowers Foods Inc's revenue has increased by approximately 4.90% per year on average, a rate that underperforms than approximately 59.12% 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, Flowers Foods Inc's earnings increased by approximately -1.00% per year on average, a rate that underperforms than approximately 61.37% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.60%, which underperforms than approximately 49.24% of global competitors.
Conclusion
Considering Flowers Foods Inc's historical dividend reliability, current yield, and growth rates, the company presents an attractive prospect for dividend investors. However, potential investors should be cautious of the sustainability issues indicated by the high payout ratio and underperforming growth metrics. Monitoring these factors closely will be crucial for those looking to invest for long-term dividend income. 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.
