Hamilton Beach Brands Holding (NYSE:HBB) Has Affirmed Its Dividend Of $0.105

Hamilton Beach Brands Holding Company (NYSE:HBB) has announced that it will pay a dividend of $0.105 per share on the 15th of September. This means the annual payment is 3.4% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Hamilton Beach Brands Holding

Hamilton Beach Brands Holding's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Hamilton Beach Brands Holding was earning enough to cover the dividend, but free cash flows weren't positive. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS could expand by 5.9% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

Hamilton Beach Brands Holding Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 5 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 5 years was $0.34 in 2017, and the most recent fiscal year payment was $0.42. This means that it has been growing its distributions at 4.3% per annum over that time. Hamilton Beach Brands Holding hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Hamilton Beach Brands Holding Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Hamilton Beach Brands Holding has seen EPS rising for the last three years, at 5.9% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Hamilton Beach Brands Holding's prospects of growing its dividend payments in the future.

Our Thoughts On Hamilton Beach Brands Holding's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for Hamilton Beach Brands Holding you should be aware of, and 2 of them can't be ignored. Is Hamilton Beach Brands Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.