Despite a recent 6.9% decline in its stock value over the past month, Imperial Oil (NYSE:IMO) is showcasing robust financial health with a notable return on equity (ROE). The company achieved an ROE of 22% between September 2022 and September 2023, translating to CA$0.22 in profit for every CA$1 (USD1 = CAD1.3807) of shareholder equity. This performance surpasses the industry average ROE of 17%.
Over the last five years, Imperial Oil has witnessed its net income grow by 34%, although this figure trails behind the industry's growth rate of 42%. The company has been reinvesting a significant portion of its earnings back into the business, with a low three-year median payout ratio of only 13%. This strategy reflects Imperial Oil's commitment to using its profits to fuel further growth.
Despite retaining the majority of its profits, Imperial Oil has consistently paid dividends to shareholders for at least a decade. Looking ahead, the company intends to raise its payout ratio to 28% over the next three years. This increase in dividend payouts is not expected to have a substantial impact on the company's robust ROE.
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