Quaker Houghton's Dividend Analysis
A Deep Dive into Quaker Houghton's Dividend Performance and Sustainability
Quaker Houghton (NYSE:KWR) recently announced a dividend of $0.46 per share, payable on October 31, 2023, with the ex-dividend date set for October 16, 2023. As investors anticipate this upcoming payment, it's an opportune time to examine Quaker Houghton's dividend history, yield, and growth rates. Using the data from GuruFocus, let's delve into Quaker Houghton's dividend performance and assess its sustainability.
What Does Quaker Houghton Do?
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Quaker Houghton manufactures and sells a wide range of industrial process fluids. Its product portfolio includes metal removal fluids, cleaning fluids, corrosion inhibitors, metal drawing and forming fluids, die cast mold releases, heat treatment and quenchants, metal forging fluids, hydraulic fluids, specialty greases, offshore sub-sea energy control fluids, rolling lubricants, rod and wire drawing fluids and surface treatment chemicals. The company's geographic segments include America, EMEA, Asia/Pacific and Global Specialty Businesses, with the majority of the revenue generated from America.
A Glimpse at Quaker Houghton's Dividend History
Quaker Houghton has maintained a consistent dividend payment record since 1985, with dividends currently distributed on a quarterly basis. The company has increased its dividend each year since 1997, earning it the title of a dividend aristocrat, an accolade given to companies that have consistently increased their dividend each year for at least the past 26 years.
Breaking Down Quaker Houghton's Dividend Yield and Growth
As of today, Quaker Houghton has a 12-month trailing dividend yield of 1.20% and a 12-month forward dividend yield of 1.26%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, Quaker Houghton's annual dividend growth rate was 3.60%, and over the past decade, its annual dividends per share growth rate stands at 5.80%.
The Sustainability Question: Payout Ratio and Profitability
To evaluate the sustainability of the dividend, it's crucial to consider the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, ensuring the availability of funds for future growth and unexpected downturns. As of June 30, 2023, Quaker Houghton's dividend payout ratio is 3.66, which may suggest a potential risk to the sustainability of the company's dividend.
Quaker Houghton's profitability rank, as judged by GuruFocus, is 8 out of 10, suggesting good profitability prospects. The company has reported net profit in 9 out of the past 10 years.
Growth Metrics: The Future Outlook
Robust growth metrics are essential for ensuring the sustainability of dividends. Quaker Houghton's growth rank of 8 out of 10 suggests a promising growth trajectory relative to its competitors. The company's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Quaker Houghton's revenue has increased by approximately 13.30% per year on average, a rate that outperforms approximately 62% of global competitors.
Conclusion
In conclusion, Quaker Houghton's consistent dividend payments, impressive dividend growth rate, and solid profitability metrics make it a compelling option for investors seeking income. However, its relatively low payout ratio may raise questions about the sustainability of its dividend. The company's strong growth metrics suggest a promising future, but investors should closely monitor these factors and consider them in the context of their individual investment goals and risk tolerance.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
