Hyster-Yale Materials Handling (NYSE:HY) Is Paying Out A Dividend Of $0.3225

Hyster-Yale Materials Handling, Inc. (NYSE:HY) will pay a dividend of $0.3225 on the 15th of December. This means the annual payment is 4.1% of the current stock price, which is above the average for the industry.

View our latest analysis for Hyster-Yale Materials Handling

Hyster-Yale Materials Handling Doesn't Earn Enough To Cover Its Payments

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Even in the absence of profits, Hyster-Yale Materials Handling is paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.

The next 12 months is set to see EPS grow by 108.1%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 149% over the next year.

Hyster-Yale Materials Handling Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $1.00 in 2012 to the most recent total annual payment of $1.29. This works out to be a compound annual growth rate (CAGR) of approximately 2.6% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Hyster-Yale Materials Handling's earnings per share has shrunk at 68% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

The Dividend Could Prove To Be Unreliable

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 stable, but we think the company is paying out too much for this to continue for the long term. We don't think Hyster-Yale Materials Handling is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs for Hyster-Yale Materials Handling that investors should know about before committing capital to this stock. Is Hyster-Yale Materials Handling not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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