Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see P. H. Glatfelter Company (NYSE:GLT) is about to trade ex-dividend in the next four days. If you purchase the stock on or after the 2nd of October, you won't be eligible to receive this dividend, when it is paid on the 2nd of November.
P. H. Glatfelter's next dividend payment will be US$0.14 per share, and in the last 12 months, the company paid a total of US$0.54 per share. Looking at the last 12 months of distributions, P. H. Glatfelter has a trailing yield of approximately 4.0% on its current stock price of $13.59. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to check whether the dividend payments are covered, and if earnings are growing.
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. P. H. Glatfelter reported a loss after tax last year, which means it's paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Thankfully its dividend payments took up just 27% of the free cash flow it generated, which is a comfortable payout ratio.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. P. H. Glatfelter reported a loss last year, and the general trend suggests its earnings have also been declining in recent years, making us wonder if the dividend is at risk.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. P. H. Glatfelter has delivered 4.1% dividend growth per year on average over the past 10 years.
Remember, you can always get a snapshot of P. H. Glatfelter's financial health, by checking our visualisation of its financial health, here.
To Sum It Up
Is P. H. Glatfelter an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." With the way things are shaping up from a dividend perspective, we'd be inclined to steer clear of P. H. Glatfelter.
With that being said, if you're still considering P. H. Glatfelter as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 2 warning signs for P. H. Glatfelter (1 is potentially serious!) that you ought to be aware of before buying the shares.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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