Kaman (NYSE:KAMN) Has Affirmed Its Dividend Of US$0.20

Kaman Corporation (NYSE:KAMN) will pay a dividend of US$0.20 on the 8th of July. 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 Kaman

Kaman's Distributions May Be Difficult To Sustain

If it is predictable over a long period, even low dividend yields can be attractive. Kaman is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in 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 38.0%, so this could continue over the next year. 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.

Kaman Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was US$0.56 in 2011, and the most recent fiscal year payment was US$0.80. This means that it has been growing its distributions at 3.6% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Kaman's earnings per share has shrunk at 38% 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.

Our Thoughts On Kaman's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kaman's payments, as there could be some issues with sustaining them into the future. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for Kaman 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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