Park Aerospace (NYSE:PKE) Will Pay A Dividend Of US$0.10
The board of Park Aerospace Corp. (NYSE:PKE) has announced that it will pay a dividend of US$0.10 per share on the 4th of August. This means the annual payment is 3.2% of the current stock price, which is above the average for the industry.
View our latest analysis for Park Aerospace
Park Aerospace Is Paying Out More Than It Is Earning
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 97% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.
EPS is set to fall by 4.9% over the next 12 months if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio could reach 102%, which could put the dividend in jeopardy if the company's earnings don't improve.
Dividend Volatility
The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The last annual payment of US$0.40 was flat on the first annual payment 10 years ago. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
The Dividend's Growth Prospects Are Limited
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. It's not great to see that Park Aerospace's earnings per share has fallen at approximately 4.9% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
We're Not Big Fans Of Park Aerospace's Dividend
Overall, while some might be pleased that the dividend wasn't cut, we think this may help Park Aerospace make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. The dividend doesn't inspire confidence that it will provide solid income in the future.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for Park Aerospace that investors should know about before committing capital to this stock. Is Park Aerospace not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
