Valhi (NYSE:VHI) Has Affirmed Its Dividend Of US$0.08
Valhi, Inc.'s (NYSE:VHI) investors are due to receive a payment of US$0.08 per share on 23rd of September. The dividend yield is 1.4% based on this payment, which is a little bit low compared to the other companies in the industry.
See our latest analysis for Valhi
Valhi's Earnings Easily Cover the Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Valhi was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.
Looking forward, EPS could fall by 4.4% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could be 12%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
Dividend Volatility
The company's dividend history has been marked by instability, with at least 1 cut in the last 10 years. The first annual payment during the last 10 years was US$1.60 in 2011, and the most recent fiscal year payment was US$0.32. Dividend payments have fallen sharply, down 80% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
Valhi May Find It Hard To Grow The Dividend
Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Over the past five years, it looks as though Valhi's EPS has declined at around 4.4% a year. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends.
In Summary
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 3 warning signs for Valhi that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.
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.
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