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Magellan Financial Group Ltd's Dividend Analysis

Delving into the Dividend Details of Magellan Financial Group Ltd (MGLLF)

Magellan Financial Group Ltd (MGLLF) recently announced a dividend of $0.29 per share, payable on 2024-03-06, with the ex-dividend date set for 2024-02-20. 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 Magellan Financial Group Ltd's dividend performance and assess its sustainability.

What Does Magellan Financial Group Ltd Do?

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Magellan Financial Group is an Australia-based niche funds manager. Established in 2006, the firm specializes in the management of equity and infrastructure funds for domestic retail and institutional investors. Magellan has historically been particularly successful in winning mandates from global institutional investors. Current FUM is split across global equities, infrastructure and Australian equities.

Magellan Financial Group Ltd's Dividend Analysis
Magellan Financial Group Ltd's Dividend Analysis

A Glimpse at Magellan Financial Group Ltd's Dividend History

Magellan Financial Group Ltd has maintained a consistent dividend payment record since 2019. Dividends are currently distributed on a bi-annual basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Magellan Financial Group Ltd's Dividend Yield and Growth

As of today, Magellan Financial Group Ltd currently has a 12-month trailing dividend yield of 8.77% and a 12-month forward dividend yield of 5.91%. This suggests an expectation of decreased dividend payments over the next 12 months.

Over the past three years, Magellan Financial Group Ltd's annual dividend growth rate was -17.20%. Extended to a five-year horizon, this rate increased to 6.40% per year. And over the past decade, Magellan Financial Group Ltd's annual dividends per share growth rate stands at an impressive 28.30%.

Based on Magellan Financial Group Ltd's dividend yield and five-year growth rate, the 5-year yield on cost of Magellan Financial Group Ltd stock as of today is approximately 11.96%.

Magellan Financial Group Ltd's Dividend Analysis
Magellan Financial Group 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 2023-06-30, Magellan Financial Group Ltd's dividend payout ratio is 1.16, which may suggest that the company's dividend may not be sustainable.

Magellan Financial Group Ltd's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Magellan Financial Group Ltd's profitability 4 out of 10 as of 2023-06-30, suggesting the dividend may not be sustainable. The company has reported positive net income for each 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. Magellan Financial Group Ltd's growth rank of 4 out of 10 suggests that the company has poor growth prospects and thus, the dividend may not be sustainable.

Revenue is the lifeblood of any company, and Magellan Financial Group Ltd's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Magellan Financial Group Ltd's revenue has increased by approximately -15.10% per year on average, a rate that underperforms than approximately 73.53% 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, Magellan Financial Group Ltd's earnings increased by approximately -26.60% per year on average, a rate that underperforms than approximately 80.09% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of -6.50%, which underperforms than approximately 80.06% of global competitors.

Next Steps

In conclusion, while Magellan Financial Group Ltd offers an attractive dividend yield and has a history of consistent dividend payments, the company's negative growth rates and low profitability rank raise concerns about the sustainability of its dividends. The high dividend payout ratio further intensifies these concerns, suggesting that Magellan Financial Group may need to reassess its dividend policy in alignment with its earnings and growth prospects. Investors should closely monitor the company's financial health and future earnings reports to make informed decisions regarding their investment in Magellan Financial Group Ltd. For those seeking high-dividend yield stocks with better growth and sustainability prospects, GuruFocus Premium users can utilize 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.