Some of the world’s top investors stick to dividend stocks. They understand that a reliable stream of income is a top wealth-building strategy. They also know that finding the best deals is vital. So today, we’re going to review another company with a long history of paying dividends. Let’s dive into valuing Nu Skin‘s (NYSE: NUS) stock – and to start, let’s review the dividend history and safety.
Nu Skin Stock Overview and Highlights
Nu Skin is a $3.7 billion business that operates out of Provo, Utah. The company employs 4,700 people and pulled in $2.3 billion in sales last year. That works out to $485,000 per employee.
Nu Skin stock is within the consumer sector, and the business continues to expand operations and pay dividends. Nu Skin recently acquired LifeGen for its collection of anti-aging gene expression data. Nu Skin has gained access to over half a billion genetic data points that should help lead to new and improved products. This should increase sales and help support Nu Skin dividend payouts.
Nu Skin Dividend History Over 10 Years
Nu Skin paid investors $0.44 per share a decade ago. Over the last 10 years, the dividend has climbed to $1.44. That’s a 227% increase! You can see the annual changes below.
Nu Skin Stock: Dividend History 10-Years
The compound annual growth is 12.6% over 10 years, and over the last year, the dividend climbed 1.4%. The slowing dividend growth isn’t a good sign. However, Nu Skin stock still might be a good income investment. Let’s review the yield.
Nu Skin Current Dividend Yield vs. 10-Year Average
Nu Skin has a long history of paying dividends, and that makes it one of the best dividend stocks around. This also makes Nu Skin’s dividend yield an indicator of value. Generally, a higher yield is more attractive for buyers. Also, sustainability is essential, so we’ll look at that soon.
The dividend yield comes in at 2.17%, which is below the 10-year average of 2.64%. The chart below shows Nu Skin stock’s dividend yield over the last 10 years.
NUS Current Dividend Yield vs. 10-Year Average
The lower yield shows that investors have bid up the company’s market value. They might be expecting higher growth and dividend payouts. But more often than not, the dividend yield is mean-reverting with share price changes.
Improved Nu Skin Shares Dividend Safety Check
Many investors look at payout ratio to determine dividend safety. To do this, they look at the dividend per share divided by the net income per share. So a payout ratio of 60% would mean that for every $1 Nu Skin earns, it pays investors $0.60.
Payout ratio is a solid sign of dividend safety… but accountants manipulate net income. They adjust for goodwill and other non-cash items. A better metric is free cash flow.
Here’s Nu Skin’s payout ratio based on free cash flow over the last 10 years.
The ratio spiked in 2014, but that was a one-time spike. The last reported year shows a payout ratio of 31.4%. At that level, Nu Skin’s dividend is safe for now. There’s plenty of wiggle room for Nu Skin’s board of directors to raise the dividend.
Nu Skin Stock pays a reasonable dividend and it looks safe… but analysts should review the company’s future prospects in great detail. Our Chief Income Strategist Marc Lichtenfeld researches thousands of stocks in more detail. And the best part is that he gives away some of his dividend research for free. You can sign up for his Wealthy Retirement e-letter by Clicking Here!
Good investing,
Robert
