Stock Analysis

Be Sure To Check Out Masco Corporation (NYSE:MAS) Before It Goes Ex-Dividend

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NYSE:MAS
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Masco Corporation (NYSE:MAS) stock is about to trade ex-dividend in three days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. This means that investors who purchase Masco's shares on or after the 11th of August will not receive the dividend, which will be paid on the 29th of August.

The company's next dividend payment will be US$0.28 per share, on the back of last year when the company paid a total of US$1.12 to shareholders. Calculating the last year's worth of payments shows that Masco has a trailing yield of 2.1% on the current share price of $52.72. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Masco has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Masco

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Masco paid out a comfortable 30% of its profit last year. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It distributed 34% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Masco's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
NYSE:MAS Historic Dividend August 7th 2022

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. That's why it's comforting to see Masco's earnings have been skyrocketing, up 21% per annum for the past five years. Masco is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last 10 years, Masco has lifted its dividend by approximately 14% a year on average. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.

Final Takeaway

From a dividend perspective, should investors buy or avoid Masco? Masco has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Overall we think this is an attractive combination and worthy of further research.

In light of that, while Masco has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 3 warning signs for Masco (1 is potentially serious!) that deserve your attention before investing in the shares.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

What are the risks and opportunities for Masco?

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally.

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Rewards

  • Trading at 17.4% below our estimate of its fair value

  • Earnings are forecast to grow 3.67% per year

  • Earnings grew by 87.2% over the past year

Risks

  • Negative shareholders equity

  • Significant insider selling over the past 3 months

  • Has a high level of debt

View all Risks and Rewards

Share Price

Market Cap

1Y Return

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About NYSE:MAS

Masco

Masco Corporation designs, manufactures, and distributes home improvement and building products in North America, Europe, and internationally.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation4
Future Growth2
Past Performance5
Financial Health2
Dividends5

Read more about these checks in the individual report sections or in our analysis model.

Solid track record established dividend payer.