Hubbell Inc's Dividend Analysis
Assessing the Sustainability of Hubbell Inc's Upcoming Dividend
Hubbell Inc (NYSE:HUBB) recently announced a dividend of $1.22 per share, payable on 2024-03-15, with the ex-dividend date set for 2024-02-28. 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 Hubbell Inc's dividend performance and assess its sustainability.
What Does Hubbell Inc Do?
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Hubbell is a diversified conglomerate industrial company that mostly competes in the electrical components market. Its products and services serve vital portions of the U.S. electrical supply chain, including transmission and distribution as well as the commercial, industrial, and residential end markets. The company organizes its business into two segments: Utility Solutions Segment and the Electrical Solutions Segment. It derives maximum revenue from Utility Solutions Segment.
A Glimpse at Hubbell Inc's Dividend History
Hubbell Inc has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis.
Hubbell Inc has increased its dividend each year since 1984. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 40 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Hubbell Inc's Dividend Yield and Growth
As of today, Hubbell Inc currently has a 12-month trailing dividend yield of 1.24% and a 12-month forward dividend yield of 1.32%. This suggests an expectation of increased dividend payments over the next 12 months.
Hubbell Inc's dividend yield of 1.24% is near a 10-year low and underperforms than 63.13% of global competitors in the Industrial Products industry, suggesting that the company's dividend yield may not be a compelling proposition for income investors.
Over the past three years, Hubbell Inc's annual dividend growth rate was 7.30%. Extended to a five-year horizon, this rate increased to 7.70% per year. And over the past decade, Hubbell Inc's annual dividends per share growth rate stands at 9.50%.
Based on Hubbell Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Hubbell Inc stock as of today is approximately 1.80%.
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, Hubbell Inc's dividend payout ratio is 0.30.