Spectrum Brands Holdings (NYSE:SPB) Has Announced A Dividend Of $0.42

The board of Spectrum Brands Holdings, Inc. (NYSE:SPB) has announced that it will pay a dividend on the 18th of June, with investors receiving $0.42 per share. This payment means the dividend yield will be 1.8%, which is below the average for the industry.

Check out our latest analysis for Spectrum Brands Holdings

Spectrum Brands Holdings Doesn't Earn Enough To Cover Its Payments

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Despite not generating a profit, Spectrum Brands Holdings is still paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

Over the next year, EPS is forecast to expand by 154.3%. If the dividend continues on its recent course, the payout ratio in 12 months could be 194%, which is a bit high and could start applying pressure to the balance sheet.

Spectrum Brands Holdings' Dividend Has Lacked Consistency

Looking back, Spectrum Brands Holdings' dividend hasn't been particularly consistent. This suggests that the dividend might not be the most reliable. The dividend has gone from an annual total of $10.42 in 2018 to the most recent total annual payment of $1.68. This works out to a decline of approximately 84% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth Potential Is Shaky

Given that dividend payments have been shrinking like a glacier in a warming world, we need to check if there are some bright spots on the horizon. Over the past five years, it looks as though Spectrum Brands Holdings' EPS has declined at around 23% a year. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Spectrum Brands Holdings' Dividend Doesn't Look Great

In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Spectrum Brands Holdings that you should be aware of before investing. Is Spectrum Brands Holdings 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.