Berry Global Group, Inc. (NYSE:BERY) Looks Interesting, And It's About To Pay A Dividend
Berry Global Group, Inc. (NYSE:BERY) is about to trade ex-dividend in the next four days. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. In other words, investors can purchase Berry Global Group's shares before the 29th of February in order to be eligible for the dividend, which will be paid on the 15th of March.
The company's next dividend payment will be US$0.275 per share, on the back of last year when the company paid a total of US$1.10 to shareholders. Last year's total dividend payments show that Berry Global Group has a trailing yield of 1.8% on the current share price of US$59.75. If you buy this business for its dividend, you should have an idea of whether Berry Global Group's dividend is reliable and sustainable. As a result, readers should always check whether Berry Global Group has been able to grow its dividends, or if the dividend might be cut.
View our latest analysis for Berry Global Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Berry Global Group is paying out just 22% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Luckily it paid out just 13% of its free cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Berry Global Group, with earnings per share up 5.1% on average over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. If profits are reinvested effectively, this could be a bullish combination for future earnings and dividends.
Unfortunately Berry Global Group has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
Final Takeaway
Has Berry Global Group got what it takes to maintain its dividend payments? Earnings per share have been growing moderately, and Berry Global Group is paying out less than half its earnings and cash flow as dividends, which is an attractive combination as it suggests the company is investing in growth. It might be nice to see earnings growing faster, but Berry Global Group is being conservative with its dividend payouts and could still perform reasonably over the long run. Berry Global Group looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
In light of that, while Berry Global Group has an appealing dividend, it's worth knowing the risks involved with this stock. For instance, we've identified 2 warning signs for Berry Global Group (1 can't be ignored) you should be aware of.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
