Spectrum Brands Holdings, Inc. (NYSE:SPB) Will Pay A US$0.42 Dividend In Four Days
It looks like Spectrum Brands Holdings, Inc. (NYSE:SPB) is about to go ex-dividend in the next four days. Investors can purchase shares before the 24th of August in order to be eligible for this dividend, which will be paid on the 22nd of September.
Spectrum Brands Holdings's upcoming dividend is US$0.42 a share, following on from the last 12 months, when the company distributed a total of US$1.68 per share to shareholders. Based on the last year's worth of payments, Spectrum Brands Holdings has a trailing yield of 2.9% on the current stock price of $58.06. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Spectrum Brands Holdings can afford its dividend, and if the dividend could grow.
Check out our latest analysis for Spectrum Brands Holdings
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Spectrum Brands Holdings's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. The good news is it paid out just 19% of its free cash flow in the last year.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Spectrum Brands Holdings reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Spectrum Brands Holdings has seen its dividend decline 60% per annum on average over the past two years, which is not great to see.
We update our analysis on Spectrum Brands Holdings every 24 hours, so you can always get the latest insights on its financial health, here.
Final Takeaway
Has Spectrum Brands Holdings got what it takes to maintain its dividend payments? 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." Overall, it's hard to get excited about Spectrum Brands Holdings from a dividend perspective.
So while Spectrum Brands Holdings looks good from a dividend perspective, it's always worthwhile being up to date with the risks involved in this stock. In terms of investment risks, we've identified 2 warning signs with Spectrum Brands Holdings and understanding them should be part of your investment process.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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