Apogee Enterprises (NASDAQ:APOG) Is Increasing Its Dividend To US$0.22

By
Simply Wall St
Published
January 17, 2022
NasdaqGS:APOG
Source: Shutterstock

Apogee Enterprises, Inc.'s (NASDAQ:APOG) dividend will be increasing to US$0.22 on 15th of February. This makes the dividend yield 1.7%, which is above the industry average.

View our latest analysis for Apogee Enterprises

Apogee Enterprises Might Find It Hard To Continue The Dividend

A big dividend yield for a few years doesn't mean much if it can't be sustained. Even though Apogee Enterprises isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Over the next year, EPS might fall by 27.3% based on recent performance. This means that the company won't turn a profit over the next year, but with healthy cash flows at the moment the dividend could still be okay to continue.

historic-dividend
NasdaqGS:APOG Historic Dividend January 17th 2022

Apogee Enterprises Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the first annual payment was US$0.33, compared to the most recent full-year payment of US$0.88. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Over the past five years, it looks as though Apogee Enterprises' EPS has declined at around 27% a year. 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.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Apogee Enterprises will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would be a touch cautious of relying on this stock primarily for the dividend income.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Apogee Enterprises that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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