Yahoo Finance Lamb Weston Holdings Inc's Dividend Analysis
Exploring the Sustainability and Growth of Lamb Weston's Dividend Payments
Lamb Weston Holdings Inc (NYSE:LW) recently announced a dividend of $0.36 per share, payable on 2024-05-31, with the ex-dividend date set for 2024-05-02. 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 Lamb Weston Holdings Inc's dividend performance and assess its sustainability.
What Does Lamb Weston Holdings Inc Do?
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Lamb Weston is North America's largest and the world's second-largest producer of branded and private-label frozen potato products, both by volume and value. The company's portfolio is anchored by French fries, but it also sells sweet potato fries, tater tots, diced potatoes, mashed potatoes, hash browns, and chips. Nearly 70% of revenue comes from its home market of North America, with none of the other 100 countries the company sells into representing a significant share. McDonald's is Lamb Weston's single largest customer at 13% of fiscal 2023 sales, with no other company representing more than 10%. Lamb Weston became an independent company in 2016 when it was spun off from Conagra.
A Glimpse at Lamb Weston Holdings Inc's Dividend History
Lamb Weston Holdings Inc has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a quarterly basis.
Breaking Down Lamb Weston Holdings Inc's Dividend Yield and Growth
As of today, Lamb Weston Holdings Inc currently has a 12-month trailing dividend yield of 1.44% and a 12-month forward dividend yield of 1.71%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Lamb Weston Holdings Inc's annual dividend growth rate was 6.90%. Extended to a five-year horizon, this rate stayed the same. Based on Lamb Weston Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Lamb Weston Holdings Inc stock as of today is approximately 2.01%.
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 2024-02-29, Lamb Weston Holdings Inc's dividend payout ratio is 0.23.
Lamb Weston Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lamb Weston Holdings Inc's profitability 8 out of 10 as of 2024-02-29, 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. Lamb Weston Holdings Inc'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 Lamb Weston Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lamb Weston Holdings Inc's revenue has increased by approximately 12.60% per year on average, a rate that outperforms approximately 67.11% 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, Lamb Weston Holdings Inc's earnings increased by approximately 23.20% per year on average, a rate that outperforms approximately 67.53% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 3.30%, which outperforms approximately 45.45% of global competitors.
Conclusion: Evaluating Lamb Weston Holdings Inc's Dividend Prospects
The analysis of Lamb Weston Holdings Inc's dividend payments, growth rates, payout ratio, profitability, and growth metrics paints a promising picture for value investors. With a robust financial foundation and a favorable growth outlook, Lamb Weston appears well-positioned to continue delivering value to its shareholders through sustainable dividend payments. As investors, keeping a close eye on these metrics will be key to making informed decisions about potential investments in Lamb Weston Holdings Inc.
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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.
