Humana Inc's Dividend Analysis
Understanding Humana Inc's Dividend Dynamics
Humana Inc (NYSE:HUM) recently announced a dividend of $0.89 per share, payable on 2024-04-26, with the ex-dividend date set for 2024-03-27. 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 Humana Inc's dividend performance and assess its sustainability.
What Does Humana Inc Do?
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Humana is one of the largest private health insurers in the U.S. with a focus on administering Medicare Advantage plans. The firm has built a niche specializing in government-sponsored programs, with nearly all its medical membership stemming from individual and group Medicare Advantage, Medicaid, and the military's Tricare program. The firm is also a leader in stand-alone prescription drug plans for seniors enrolled in traditional fee-for-service Medicare. Beyond medical insurance, the company provides other healthcare services, including primary-care services, at-home services, and pharmacy benefit management.
A Glimpse at Humana Inc's Dividend History
Humana Inc has maintained a consistent dividend payment record since 2011. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Humana Inc's Dividend Yield and Growth
As of today, Humana Inc currently has a 12-month trailing dividend yield of 1.02% and a 12-month forward dividend yield of 1.02%. This suggests an expectation of same dividend payments over the next 12 months.
Over the past three years, Humana Inc's annual dividend growth rate was 12.30%. Extended to a five-year horizon, this rate stayed the same. And over the past decade, Humana Inc's annual dividends per share growth rate stands at an impressive 14.70%.
Based on Humana Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Humana Inc stock as of today is approximately 1.82%.
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, Humana Inc's dividend payout ratio is 0.14.
Humana Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Humana Inc's profitability 8 out of 10 as of 2023-12-31, 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. Humana 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 Humana Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Humana Inc's revenue has increased by approximately 13.80% per year on average, a rate that underperforms than approximately 52.63% 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, Humana Inc's earnings increased by approximately 1.00% per year on average, a rate that underperforms than approximately 61.11% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 6.40%, which underperforms than approximately 78.57% of global competitors.
Next Steps
In conclusion, Humana Inc's dividend payments, supported by a strong dividend growth rate and a conservative payout ratio, reflect the company's commitment to shareholder returns. The impressive profitability rank and consistent net income over the past decade provide a foundation for dividend sustainability. However, the growth metrics present a mixed picture, with revenue growth underperforming a significant portion of global competitors and EPS growth also lagging behind. The 5-year EBITDA growth rate further signals challenges in surpassing industry peers. Investors should weigh these factors when considering Humana Inc's future dividend prospects. Could Humana Inc's strategic initiatives in the healthcare sector bolster its growth and enhance its dividend appeal? 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.
