Analyzing Eastman Chemical Co's Dividend Performance and Sustainability
Deep Dive into Eastman Chemical Co's Dividend History, Yield, and Growth Rates
Eastman Chemical Co (NYSE:EMN) recently announced a dividend of $0.79 per share, payable on 2023-10-06, with the ex-dividend date set for 2023-09-14. As investors anticipate this upcoming payment, it's crucial to examine the company's dividend history, yield, and growth rates. Using data from GuruFocus, let's delve into Eastman Chemical Co's dividend performance and assess its sustainability.
A Brief Overview of Eastman Chemical Co
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Established in 1920 to produce chemicals for Eastman Kodak, Eastman Chemical Co has evolved into a global specialty chemicals company with manufacturing sites worldwide. The company generates most of its sales outside of the United States, with a strong presence in Asian markets. Over the past several years, Eastman Chemical Co has divested noncore businesses, focusing on higher-margin specialty product offerings instead.
Eastman Chemical Co's Dividend History
Eastman Chemical Co has maintained a consistent dividend payment record since 1994, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1998, earning it the title of a dividend aristocrat. This honor is given to companies that have increased their dividend each year for at least the past 25 years.
Eastman Chemical Co's Dividend Yield and Growth
As of today, Eastman Chemical Co has a 12-month trailing dividend yield of 3.99% and a 12-month forward dividend yield of 4.01%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Eastman Chemical Co's annual dividend growth rate was 6.80%. This rate increased to 7.70% per year over a five-year horizon. Over the past decade, Eastman Chemical Co's annual dividends per share growth rate stands at an impressive 10.90%.
Based on Eastman Chemical Co's dividend yield and five-year growth rate, the 5-year yield on cost of Eastman Chemical Co stock as of today is approximately 5.78%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
The sustainability of a dividend depends on the company's payout ratio. The dividend payout ratio gives insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Eastman Chemical Co's dividend payout ratio is 0.53.
Eastman Chemical Co's profitability rank of 8 out of 10 as of 2023-06-30 suggests good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Future Prospects: Growth Metrics
A company must have robust growth metrics to ensure the sustainability of dividends. Eastman Chemical Co's growth rank of 8 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Eastman Chemical Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Eastman Chemical Co's revenue has increased by approximately 8.20% per year on average, a rate that underperforms approximately 54.26% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Eastman Chemical Co's earnings increased by approximately 5.00% per year on average, a rate that underperforms approximately 62.08% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of -8.30% underperforms approximately 84.18% of global competitors.
Conclusion
Considering Eastman Chemical Co's consistent dividend payments, impressive dividend growth rate, reasonable payout ratio, and good profitability, it appears to be a promising dividend stock. However, its growth metrics, particularly the EPS growth rate and EBITDA growth rate, are areas that could be improved for better long-term sustainability of dividends. As always, investors should conduct thorough research and consider all aspects of a company's financial health before making investment decisions.
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This article first appeared on GuruFocus.
