Hyster-Yale Materials Handling (NYSE:HY) Has Re-Affirmed Its Dividend Of US$0.32
The board of Hyster-Yale Materials Handling, Inc. (NYSE:HY) has announced that it will pay a dividend on the 22nd of March, with investors receiving US$0.32 per share. The dividend yield will be 3.6% based on this payment which is still above the industry average.
See our latest analysis for Hyster-Yale Materials Handling
Hyster-Yale Materials Handling Might Find It Hard To Continue The Dividend
If the payments aren't sustainable, a high yield for a few years won't matter that much. Even in the absence of profits, Hyster-Yale Materials Handling is paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.
Looking forward, earnings per share is forecast to rise by 95.4% over the next year. This is the right direction to be moving, but it is not enough to achieve profitability. Unless this can be done in short order, the dividend might be difficult to sustain.
Hyster-Yale Materials Handling Doesn't Have A Long Payment History
Hyster-Yale Materials Handling's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2013, the first annual payment was US$1.00, compared to the most recent full-year payment of US$1.29. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
The Dividend Has Limited Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Hyster-Yale Materials Handling's EPS has fallen by approximately 42% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
Hyster-Yale Materials Handling's Dividend Doesn't Look Great
Overall, while some might be pleased that the dividend wasn't cut, we think this may help Hyster-Yale Materials Handling make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for Hyster-Yale Materials Handling you should be aware of, and 1 of them is significant. Is Hyster-Yale Materials Handling not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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