Kronos Worldwide (NYSE:KRO) Has Affirmed Its Dividend Of $0.19
Kronos Worldwide, Inc. (NYSE:KRO) has announced that it will pay a dividend of $0.19 per share on the 14th of December. This means the annual payment is 8.7% of the current stock price, which is above the average for the industry.
View our latest analysis for Kronos Worldwide
Kronos Worldwide's Distributions May Be Difficult To Sustain
If the payments aren't sustainable, a high yield for a few years won't matter that much. Even though Kronos Worldwide is not generating a profit, it is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.
Over the next year, EPS might fall by 24.2% based on recent performance. This means the company won't be turning a profit, which could place managers in the tough spot of having to choose between suspending the dividend or putting more pressure on the balance sheet.
Kronos Worldwide Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.60, compared to the most recent full-year payment of $0.76. This works out to be a compound annual growth rate (CAGR) of approximately 2.4% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Dividend Growth Potential Is Shaky
Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 24% over the last five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.
Kronos Worldwide's Dividend Doesn't Look Sustainable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kronos Worldwide's payments, as there could be some issues with sustaining them into the future. Although they have been consistent in the past, we think the payments are a little high to be sustained. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Kronos Worldwide that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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