Eastman Chemical Co's Dividend Analysis
Assessing Eastman Chemical Co's Dividend Sustainability and Growth
Eastman Chemical Co (NYSE:EMN) recently announced a dividend of $0.81 per share, payable on 2024-01-05, with the ex-dividend date set for 2023-12-15. 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 Eastman Chemical Co's dividend performance and assess its sustainability.
About Eastman Chemical Co
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Established in 1920 to produce chemicals for Eastman Kodak, Eastman Chemical has grown into a global specialty chemicals company with manufacturing sites around the world. The company generates the majority of its sales outside of the United States, with a strong presence in Asian markets. During the past several years, Eastman has sold noncore businesses, choosing to focus on higher-margin specialty product offerings.
Eastman Chemical Co's Dividend History
Eastman Chemical Co has maintained a consistent dividend payment record since 1994, distributing dividends on a quarterly basis. Impressively, Eastman Chemical Co has increased its dividend each year since 1998, earning it the prestigious title of a dividend aristocrata recognition for companies with at least 25 consecutive years of dividend increases.
Below is a chart showing annual Dividends Per Share for tracking historical trends.
Dividend Yield and Growth Insights
As of today, Eastman Chemical Co currently has a 12-month trailing dividend yield of 3.52% and a 12-month forward dividend yield of 3.62%, indicating 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%, which increased to 7.70% per year when extended to 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 5.10%.
Evaluating Dividend Sustainability
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 2023-09-30, Eastman Chemical Co's dividend payout ratio is 0.63.
Eastman Chemical Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Eastman Chemical Co's profitability 7 out of 10 as of 2023-09-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Prospective Growth Metrics
To ensure the sustainability of dividends, a company must have robust growth metrics. Eastman Chemical Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Eastman Chemical Co's revenue has increased by approximately 8.20% per year on average, a rate that underperforms approximately 54.63% 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 3.40% per year on average, a rate that underperforms approximately 62.42% of global competitors.
The company's 5-year EBITDA growth rate of 0.70%, which underperforms approximately 71.55% of global competitors, raises some concerns about its growth potential.
Concluding Thoughts on Eastman Chemical Co's Dividends
In conclusion, Eastman Chemical Co's consistent history of dividend payments, coupled with a solid dividend growth rate, paints a favorable picture for dividend-seeking investors. The company's moderate payout ratio and good profitability rank suggest that its dividends are well-supported by earnings. However, investors should also consider the growth metrics, which indicate some challenges in outperforming the competition. Value investors interested in high-dividend yield stocks may find Eastman Chemical Co to be an attractive option, but as with any investment, it's important to look at the complete financial picture. For more detailed analyses and a list of similar investment opportunities, GuruFocus Premium users can explore the High Dividend Yield Screener.
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.
