Is AstraZeneca PLC (AZN) Among the U.K. Dividend Aristocrats for 2024?

As investors seek stable income and long-term growth, the U.K. Dividend Aristocrats list is an attractive starting point. This list tracks the performance of the highest-yielding UK companies with at least 7 consecutive years of dividend growth. AstraZeneca PLC (AZN), a biopharmaceutical company, is one of the largest in the world and has a strong track record of dividend payments. Let's explore whether AZN qualifies as a U.K. Dividend Aristocrat for 2024.



Dividend Yield and Payout Ratio

As of December 28, 2024, AstraZeneca's dividend yield is 2.28%, which is competitive among U.K. Dividend Aristocrats. The company's dividend payout ratio is 1.3, indicating that it pays out 130% of its earnings as dividends. While this is higher than the average payout ratio of U.K. Dividend Aristocrats, it is important to note that AstraZeneca's strong cash flow generation supports this higher payout.

Dividend Growth and Stability

AstraZeneca has a history of regular dividend payments, with the Board announcing a 7% increase to the annualised dividend for 2024, taking it to $3.10 per share. This increase reflects the company's confidence in its performance and cash generation. AstraZeneca's dividend growth rate has varied over the years, with a compound annual growth rate (CAGR) of approximately 10.5% over the past 17 years. While this rate is lower than the average growth rate of the UK Dividend Aristocrats ETF, AstraZeneca's dividend growth is supported by its strong financial performance and cash flow generation.



Product Pipeline and Innovation Strategy

AstraZeneca's product pipeline and innovation strategy contribute to its dividend growth and stability. The company's focus on innovative medicines, particularly in the areas of oncology, rare diseases, and bio-pharmaceuticals, has led to a robust pipeline of investigational therapies in various stages of clinical development. This pipeline forms a strong foundation for the company's future growth and cash generation, which in turn supports its progressive dividend policy.

Geographic Diversification

AstraZeneca's geographic diversifications play a significant role in maintaining dividend stability. The company operates in over 100 countries, which helps to spread risk and ensure a steady revenue stream. This diversification is evident in the company's revenue breakdown, with over 50% of total sales generated from the United States, and over 30% from its gastrointestinal treatments. Additionally, the company's operations in China, although recently disrupted, have been a key international market for the company. This geographic diversification allows AstraZeneca to maintain a strong financial position, which in turn supports its progressive dividend policy.

Financial Management and Cash Flow Generation

AstraZeneca's financial management and cash flow generation play a crucial role in supporting its dividend policy. The company has a strong track record of generating substantial cash flows, which enables it to maintain and grow its dividends over time. AstraZeneca's operating cash flow (OCF) in the first nine months of 2024 was nearly $9 billion, up from $7.9 billion in the prior-year period. The company ended Q3 2024 with roughly $5 billion available in cash and cash equivalents, providing a solid foundation for dividend payments and other capital allocation priorities.



Conclusion

AstraZeneca PLC (AZN) is a strong contender for the U.K. Dividend Aristocrats list for 2024. The company's competitive dividend yield, history of dividend growth, and robust product pipeline support its inclusion. While AstraZeneca's dividend payout ratio is higher than the average for U.K. Dividend Aristocrats, its strong cash flow generation and geographic diversification provide a solid foundation for dividend payments. As investors seek stable income and long-term growth, AstraZeneca PLC (AZN) is an attractive option for consideration.