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Skanska AB's Dividend Analysis

Understanding Skanska AB's Dividend Performance and Prospects

Skanska AB(SKBSY) recently announced a dividend of $0.53 per share, payable on 2024-04-12, with the ex-dividend date set for 2024-04-01. 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 Skanska ABs dividend performance and assess its sustainability.

What Does Skanska AB Do?

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Skanska AB is one of the world's leading construction and project development companies. It develops properties and structures in the Nordic region, North America, and elsewhere. The company uses its skills and expertise to develop highways, bridges, mass transit, houses, and logistic centers. Skanska operates in business segments: construction (the majority of total revenue), residential development, Investment Properties, and commercial property development. The majority of revenue derives from Sweden.

Skanska AB's Dividend Analysis
Skanska AB's Dividend Analysis

A Glimpse at Skanska AB's Dividend History

Skanska AB has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a yearly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.

Breaking Down Skanska AB's Dividend Yield and Growth

As of today, Skanska AB currently has a 12-month trailing dividend yield of 3.89% and a 12-month forward dividend yield of 2.82%. This suggests an expectation of decreased dividend payments over the next 12 months.

Over the past three years, Skanska AB's annual dividend growth rate was 32.10%. Extended to a five-year horizon, this rate decreased to 2.00% per year. And over the past decade, Skanska AB's annual dividends per share growth rate stands at -0.50%.

Based on Skanska AB's dividend yield and five-year growth rate, the 5-year yield on cost of Skanska AB stock as of today is approximately 4.29%.

Skanska AB's Dividend Analysis
Skanska AB'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, Skanska AB's dividend payout ratio is 0.63.

Skanska AB's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Skanska AB's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. 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. Skanska AB's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.

Revenue is the lifeblood of any company, and Skanska AB's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Skanska AB's revenue has increased by approximately 1.40% per year on average, a rate that underperforms than approximately 58.36% 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, Skanska AB's earnings increased by approximately -20.30% per year on average, a rate that underperforms than approximately 81.46% of global competitors.

Lastly, the company's 5-year EBITDA growth rate of 2.90%, which underperforms than approximately 54.57% of global competitors.

Next Steps

In conclusion, Skanska AB's upcoming dividend payment, along with its history of consistent dividends, presents an appealing aspect for income-focused investors. However, the anticipated decrease in dividend yield and the mixed performance in growth metrics warrant a closer examination of the company's long-term dividend sustainability. The fair profitability and payout ratio suggest that Skanska AB is currently managing to maintain its dividends, but investors should keep an eye on the company's future earnings and revenue growth to ensure that dividends can be sustained or potentially increased. Considering these factors, value investors should weigh Skanska AB's dividend attributes against their investment criteria and risk appetite.

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.