Quanex Building Products' (NYSE:NX) Dividend Will Be $0.08

Quanex Building Products Corporation (NYSE:NX) has announced that it will pay a dividend of $0.08 per share on the 30th of September. This means that the annual payment will be 1.3% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Quanex Building Products

Quanex Building Products' Projected Earnings Seem Likely To Cover Future Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Quanex Building Products was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to fall by 1.2% over the next year. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 14%, which is comfortable for the company to continue in the future.

Quanex Building Products Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $0.16 in 2014, and the most recent fiscal year payment was $0.32. This means that it has been growing its distributions at 7.2% per annum over that time. 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 Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Quanex Building Products has been growing its earnings per share at 46% a year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like Quanex Building Products' Dividend

Overall, we like to see the dividend staying consistent, and we think Quanex Building Products might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Now, if you want to look closer, it would be worth checking out our free research on Quanex Building Products management tenure, salary, and performance. Is Quanex Building Products not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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