Understanding the dividend of a company can be a valuable asset in making an informed decision to invest, stay invested, or not to invest.
It is important for an investor to consider the benefits that dividends can offer and how easy it is to include dividend paying stocks in any portfolio. Some of the advantages a quality dividend stock can offer are attractive returns, less volatility, and, over time, increasing yields. These are some aspects that a quality dividend stock can add to a portfolio.
In this article, I will be analyzing Schlumberger NV's (SLB) historical dividend payout, earnings per share growth rate, and historical dividend payout ratios. Based on these criteria, we should get a good understanding of the history of the dividend and some estimates of what to expect in the future.
According to the company website, "Schlumberger has paid a quarterly dividend since 1957. "
Below is a chart of the dividend payout per fiscal year for Schlumberger NV's company's common shares since 2003.
Please note: The payout numbers have been adjusted to compensate for the 2006 stock 2 for 1 stock split.
The current dividend payment as of October 18th 2012, for Schlumberger NV is $.275 USD per common share. This will put the dividend payout for total 2012 at $1.10 US. For the full year 2012, a consensus of 36 analysis at Bloomberg Businessweek are stating that Schlumberger NV will have an EPS of $4.23. As Bloomberg Businessweek is estimating Schlumberger's 2012 revenue at $42.5 billion, this would give the company a net profit margin of 13.25% and a projected net income of $5.63 billion.
These results would be a strong increase in revenue over 2011, and a slight increase in the net profit margin over 2011. With a dividend payout of $1.10 and an EPS of $4.23, in 2012 Schlumberger NV would have a payout ratio of 26.00%.
Looking forward to 2013, Bloomberg analysts are currently estimating Schlumberger's 2013 revenue to be at $46.2 billion. Analysts are projecting the EPS for 2013 at $4.92. If the company maintains the same amount of shares outstanding at 1.33 billion, this would give the company a net profit margin of 14.15% and a projected net income of $6.54 billion.
In 2013, if the company was able to achieve analysts estimates of an EPS of $4.92, Schlumberger NV would be able to support a dividend payout of $1.23. This would give Schlumberger NV a 2013 payout ratio of 25.00%. A dividend payout of $1.23 for 2013 would be an 8.94% increase over 2012 dividend payout of $1.10.
Since 2004, the average payout ratio for Schlumberger NV company is 24.25%. The estimated dividend payout ratio for 2013 is 25.00%. This ratio is slightly higher in than the company's payout ratio average since 2004, but inline with the last 4 years payout ratio and estimates.
Based on many of the company's financial ratios, Schlumberger NV's company appears to be very strong regarding its financial health. The company seems to have an handle on its debt with a increase in debt and liabilities but the ability to pay for it, as I described in my article Analyzing Schlumberger's Debt And Risk".
The company looks to have strong growth in the future, and plenty of free cash to maintain its growth and continue to provide a dividend. This is described my articles "Schlumberger: Profitability Analysis" and "Schlumberger Limited: Inside The Numbers"
Looking forward to 2013, the indications noted above reveal that Schlumberger NV is in good financial shape and should be able to maintain its tradition of providing its shareholders with a dividend.