Dow Inc's Dividend Analysis
Assessing the Sustainability and Growth of Dow Inc's Dividend
Dow Inc (NYSE:DOW) recently announced a dividend of $0.7 per share, payable on 2024-03-08, with the ex-dividend date set for 2024-02-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Dow Inc's dividend performance and assess its sustainability.
What Does Dow Inc Do?
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Dow Chemical is a diversified global chemicals producer, formed in 2019 as a result of the DowDuPont merger and subsequent separations. The firm is a leading producer of several chemicals, including polyethylene, ethylene oxide, and silicone rubber. Its products have numerous applications in both consumer and industrial end markets.
A Glimpse at Dow Inc's Dividend History
Dow Inc has maintained a consistent dividend payment record since 2019. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Dow Inc's Dividend Yield and Growth
As of today, Dow Inc currently has a 12-month trailing dividend yield of 5.01% and a 12-month forward dividend yield of 5.01%. This suggests an expectation of same dividend payments over the next 12 months.
Based on Dow Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Dow Inc stock as of today is approximately 5.01%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides 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 2023-12-31, Dow Inc's dividend payout ratio is 1.40, which may suggest that the company's dividend may not be sustainable.
Dow Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Dow Inc's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 7 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Dow Inc's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Dow Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Dow Inc's revenue has increased by approximately 6.60% per year on average, a rate that underperforms approximately 60.81% 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, Dow Inc's earnings increased by approximately 4.40% per year on average, a rate that underperforms approximately 61.06% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 2.60%, which underperforms approximately 67.78% of global competitors.
Next Steps
Considering Dow Inc's steady dividend payments, dividend growth rate, payout ratio, profitability, and growth metrics, investors should weigh the current yield against these factors to gauge future performance. While the dividend yield is attractive, the payout ratio and growth metrics suggest potential challenges to sustainability. It is important for investors to monitor these indicators closely, especially in a dynamic market environment. Investors seeking additional opportunities in high-yield dividends can utilize tools like the GuruFocus High Dividend Yield Screener to explore further investment options.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
