Spectrum Brands Holdings (NYSE:SPB) Is Due To Pay A Dividend Of US$0.42
Spectrum Brands Holdings, Inc. (NYSE:SPB) will pay a dividend of US$0.42 on the 9th of June. Based on this payment, the dividend yield will be 2.0%, which is fairly typical for the industry.
See our latest analysis for Spectrum Brands Holdings
Spectrum Brands Holdings Might Find It Hard To Continue The Dividend
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Spectrum Brands Holdings is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. This gives us some comfort about the level of the dividend payments.
Looking forward, earnings per share could rise by 9.3% over the next year if the trend from the last few years continues. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. However, the positive cash flow ratio gives us some comfort about the sustainability of the dividend.
Spectrum Brands Holdings' Dividend Has Lacked Consistency
Looking back, the company hasn't been paying the most consistent dividend, but with such a short dividend history it could be too early to draw solid conclusions. Since 2018, the first annual payment was US$10.42, compared to the most recent full-year payment of US$1.68. Dividend payments have fallen sharply, down 84% over that time. A company that decreases its dividend over time generally isn't what we are looking for.
We Could See Spectrum Brands Holdings' Dividend Growing
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Spectrum Brands Holdings has impressed us by growing EPS at 9.3% per year over the past five years. Even though the company isn't making a profit, strong earnings growth could turn that around in the near future. All is not lost, but the future of the dividend definitely rests upon the company's ability to become profitable soon.
In Summary
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 1 warning sign for Spectrum Brands Holdings that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
