Hamilton Beach Brands Holding (NYSE:HBB) Will Pay A Dividend Of $0.105

The board of Hamilton Beach Brands Holding Company (NYSE:HBB) has announced that it will pay a dividend on the 15th of March, with investors receiving $0.105 per share. This means the annual payment is 3.2% of the current stock price, which is above the average for the industry.

See our latest analysis for Hamilton Beach Brands Holding

Hamilton Beach Brands Holding's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Hamilton Beach Brands Holding is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. 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.

If the trend of the last few years continues, EPS will grow by 5.9% over the next 12 months. 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. Since 2018, the dividend has gone from $0.34 total annually to $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

Investors could be attracted to the stock based on the quality of its payment history. Hamilton Beach Brands Holding has seen EPS rising for the last five years, at 5.9% per annum. Hamilton Beach Brands Holding definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Hamilton Beach Brands Holding's payments, as there could be some issues with sustaining them into the future. While Hamilton Beach Brands Holding is earning enough to cover the payments, the cash flows are lacking. We don't think Hamilton Beach Brands Holding is a great stock to add to your portfolio if income is your focus.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 are potentially serious. 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.