Advertisement
U.S. markets close in 1 hour 46 minutes
  • S&P 500

    4,964.59
    -10.92 (-0.22%)
     
  • Dow 30

    38,500.42
    -63.38 (-0.16%)
     
  • Nasdaq

    15,524.55
    -106.24 (-0.68%)
     
  • Russell 2000

    1,993.26
    -10.88 (-0.54%)
     
  • Crude Oil

    77.88
    +0.84 (+1.09%)
     
  • Gold

    2,036.10
    -3.70 (-0.18%)
     
  • Silver

    22.91
    -0.23 (-0.98%)
     
  • EUR/USD

    1.0821
    +0.0009 (+0.09%)
     
  • 10-Yr Bond

    4.3210
    +0.0460 (+1.08%)
     
  • GBP/USD

    1.2636
    +0.0011 (+0.09%)
     
  • USD/JPY

    150.2140
    +0.2880 (+0.19%)
     
  • Bitcoin USD

    50,913.56
    -539.61 (-1.05%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,662.51
    -56.70 (-0.73%)
     
  • Nikkei 225

    38,262.16
    -101.45 (-0.26%)
     

It Might Not Be A Great Idea To Buy KBR, Inc. (NYSE:KBR) For Its Next Dividend

Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that KBR, Inc. (NYSE:KBR) is about to go ex-dividend in just 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Meaning, you will need to purchase KBR's shares before the 14th of December to receive the dividend, which will be paid on the 16th of January.

The company's next dividend payment will be US$0.14 per share. Last year, in total, the company distributed US$0.54 to shareholders. Based on the last year's worth of payments, KBR has a trailing yield of 1.0% on the current stock price of $52.24. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether KBR can afford its dividend, and if the dividend could grow.

Check out our latest analysis for KBR

Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. KBR reported a loss last year, so it's not great to see that it has continued paying a dividend. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If KBR didn't generate enough cash to pay the dividend, then it must have either paid from cash in the bank or by borrowing money, neither of which is sustainable in the long term. Fortunately, it paid out only 32% of its free cash flow in the past year.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

When earnings decline, dividend companies become much harder to analyse and own safely. If earnings fall far enough, the company could be forced to cut its dividend. KBR 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.

Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. KBR has delivered an average of 5.4% per year annual increase in its dividend, based on the past 10 years of dividend payments.

We update our analysis on KBR every 24 hours, so you can always get the latest insights on its financial health, here.

The Bottom Line

Is KBR 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." It's not an attractive combination from a dividend perspective, and we're inclined to pass on this one for the time being.

Wondering what the future holds for KBR? See what the 10 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow

A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.

Advertisement