Wolverine World Wide's (NYSE:WWW) Dividend Will Be US$0.10
Wolverine World Wide, Inc. (NYSE:WWW) will pay a dividend of US$0.10 on the 2nd of August. This means that the annual payment will be 1.1% of the current stock price, which is in line with the average for the industry.
Check out our latest analysis for Wolverine World Wide
Wolverine World Wide 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. While Wolverine World Wide is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.
Recent, EPS has fallen by 16.2%, so this could continue over the next year. While this means that the company will be unprofitable, we generally believe cash flows are more important, and the current cash payout ratio is quite healthy, which gives us comfort.
Wolverine World Wide Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the first annual payment was US$0.22, compared to the most recent full-year payment of US$0.40. This implies that the company grew its distributions at a yearly rate of about 6.2% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
The Dividend Has Limited Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Wolverine World Wide's EPS has fallen by approximately 16% per year during the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.
Our Thoughts On Wolverine World Wide's Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Wolverine World Wide's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 4 warning signs for Wolverine World Wide (of which 1 makes us a bit uncomfortable!) you should know about. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.
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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