Scotts Miracle-Gro's Quarterly Dividend: A Green Thumb for Investors

Alright, fellow investors, let's talk about Scotts Miracle-Gro (SMG) and their recent quarterly dividend announcement. You might be thinking, "Dividends? Really? Isn't that just for old folks and stuffy financial institutions?" Well, let me tell you, dividends are like the secret sauce that can make your investment portfolio grow and flourish, just like a well-tended garden. So, let's dive in and see what SMG has in store for us.

First things first, SMG has an annual dividend of $2.64 per share, with a yield of 3.40%. Now, you might be wondering, "What's a dividend yield, and why should I care?" Well, the dividend yield is the annual dividend payment expressed as a percentage of the stock's price. In other words, it's the return on investment you get just for owning the stock. So, if you own SMG shares, you'll get a 3.40% return on your investment just from the dividends.

Now, let's compare SMG's dividend yield to its historical averages and sector peers. According to the data, SMG's current dividend yield of 2.93% is lower than its 3-year average of 3.78% and 5-year average of 3.39%. However, it's still higher than the sector median of 1.73%. This means that while SMG's dividend yield has decreased over time, it's still more attractive than the average dividend yield in its sector.



But what about dividend growth? Well, SMG's 5-year compound annual growth rate (CAGR) for dividends is 2.62%, which is lower than the industry median of 5.78%. This indicates that SMG's dividend growth has been slower than its peers over the past five years. However, it's important to note that SMG has a history of consistent dividend payments, with the last ex-dividend date being Nov 22, 2024.



Now, you might be thinking, "That's all well and good, but what about the payout ratio? Is SMG's dividend sustainable in the long term?" Well, SMG's payout ratio is 100%, which means that all of its earnings are being distributed as dividends to shareholders. A high payout ratio can be a concern for the sustainability of the dividend, as it leaves little room for reinvestment in the business or to cover unexpected expenses. However, SMG's free cash flow (FCF) payout ratio is 15.03%, which is much lower than its 3-year average of 66% and 5-year average of 65.37%. A lower FCF payout ratio indicates that the company has more cash available to cover its dividend payments, even if earnings are not sufficient.

In conclusion, while SMG's dividend yield has decreased over time and its dividend growth has been slower than its peers, the company's history of consistent dividend payments and lower FCF payout ratio suggest that the dividend is sustainable in the long term. Additionally, SMG's dividend yield is still more attractive than the average dividend yield in its sector. So, if you're looking for a green thumb for your investment portfolio, Scotts Miracle-Gro's quarterly dividend might just be the perfect fit.