Exploring the Sustainability and Growth of Dividends
Penske Automotive Group Inc (PAG, Financial) recently announced a dividend of $0.96 per share, payable on June 4, 2024, with the ex-dividend date set for May 17, 2024. 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 Penske Automotive Group Inc's dividend performance and assess its sustainability.
What Does Penske Automotive Group Inc Do?
Penske Automotive Group operates in nearly 20 US states and overseas, boasting about 150 US light-vehicle stores, including in Puerto Rico, as well as 189 franchised dealerships overseas, primarily in the United Kingdom but also in Continental Europe and Japan. The company is the third-largest US-based dealership in terms of light-vehicle revenue and sells more than 35 brands, with over 90% of retail automotive revenue coming from luxury and import names. Other services, in addition to new and used vehicles, are parts and repair and finance and insurance. The firm's Premier Truck Group owns 44 truck dealerships selling mostly Freightliner and Western Star brands, and Penske owns 19 CarShop used-vehicle stores in the US and UK. The company is based in Bloomfield Hills, Michigan.
A Glimpse at Penske Automotive Group Inc's Dividend History
Penske Automotive Group Inc has maintained a consistent dividend payment record since 2011, with dividends currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Penske Automotive Group Inc's Dividend Yield and Growth
As of today, Penske Automotive Group Inc currently has a 12-month trailing dividend yield of 1.90% and a 12-month forward dividend yield of 2.09%, suggesting an expectation of increased dividend payments over the next 12 months. Over the past three years, Penske Automotive Group Inc's annual dividend growth rate was 49.00%, decreasing to 15.10% per year over a five-year horizon. Over the past decade, the annual dividends per share growth rate stands at an impressive 12.60%.
Based on Penske Automotive Group Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Penske Automotive Group Inc stock as of today is approximately 3.84%.
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. As of March 31, 2024, Penske Automotive Group Inc's dividend payout ratio is 0.21. Penske Automotive Group Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers, ranking 9 out of 10, suggesting good profitability prospects. 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, robust growth metrics are essential. Penske Automotive Group Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Penske Automotive Group Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Penske Automotive Group Inc's revenue has increased by approximately 19.60% per year on average, a rate that outperforms approximately 78.62% 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, Penske Automotive Group Inc's earnings increased by approximately 32.70% per year on average, a rate that outperforms approximately 67.43% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 32.60%, which outperforms approximately 86.73% of global competitors.
Conclusion
Considering Penske Automotive Group Inc's strong dividend payments, robust growth rate, conservative payout ratio, and high profitability, the company presents a compelling case for investors seeking stable dividend income. With its consistent performance and strategic positioning in the automotive industry, Penske Automotive Group Inc appears well-equipped to maintain its dividend growth trajectory. For those looking to explore further, 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.
