Utz Brands' (NYSE:UTZ) Dividend Will Be $0.061

The board of Utz Brands, Inc. (NYSE:UTZ) has announced that it will pay a dividend on the 2nd of January, with investors receiving $0.061 per share. Although the dividend is now higher, the yield is only 1.4%, which is below the industry average.

View our latest analysis for Utz Brands

Utz Brands' Long-term Dividend Outlook appears Promising

Even a low dividend yield can be attractive if it is sustained for years on end. Utz Brands is unprofitable despite paying a dividend, and it is paying out 131% of its free cash flow. These payout levels would generally be quite difficult to keep up.

Looking forward, earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 15%, which makes us pretty comfortable with the sustainability of the dividend.

Utz Brands Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. Since 2020, the dividend has gone from $0.20 total annually to $0.236. This means that it has been growing its distributions at 4.2% per annum over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Company Could Face Some Challenges Growing The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Utz Brands has been growing its earnings per share at 31% a year over the past five years. The company hasn't been turning a profit, but it running in the right direction. If the company can turn a profit relatively soon, we can see this becoming a reliable income stock.

Utz Brands' Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Utz Brands will make a great income stock. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We don't think Utz Brands 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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Utz Brands (1 shouldn't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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