Definition:

1-year Dividends per Share Growth Rate measures the percentage change in dividends paid per share by a company over a one-year period. It indicates how much the dividends have increased or decreased compared to the previous year.

Formula:

((Dividends per Share in Current Year - Dividends per Share in Previous Year) / Dividends per Share in Previous Year) * 100

How to use the metric:

Investors use this metric to assess a company's ability to increase its dividend payouts, which can be a sign of financial health and profitability. A positive growth rate suggests that the company is generating sufficient earnings to support higher dividends, which can be attractive to income-focused investors.

Limitations:

The 1-year Dividends per Share Growth Rate can be misleading if used in isolation. It does not account for the sustainability of dividend increases, nor does it consider external factors such as economic conditions or industry trends. Additionally, a high growth rate may not be sustainable over the long term.

Applies to:

This metric is particularly relevant in industries where companies are known for paying regular dividends, such as utilities, consumer staples, and real estate investment trusts (REITs).

Doesn't apply to:

Industries that typically do not pay dividends, such as technology or high-growth sectors, may not find this metric useful. These industries often reinvest earnings into growth opportunities rather than paying them out as dividends.

Summary:

The 1-year Dividends per Share Growth Rate is a useful metric for evaluating a company's dividend growth over a short period. While it can provide insights into financial health and shareholder returns, it should be used alongside other financial metrics and industry analysis to make informed investment decisions.