The board of Albemarle Corporation (NYSE:ALB) has announced that it will pay a dividend on the 2nd of January, with investors receiving $0.405 per share. Including this payment, the dividend yield on the stock will be 1.6%, which is a modest boost for shareholders' returns.
View our latest analysis for Albemarle
Estimates Indicate Albemarle's Dividend Coverage Likely To Improve
Even a low dividend yield can be attractive if it is sustained for years on end. Even in the absence of profits, Albemarle is paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.
According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 3.6%, so there isn't too much pressure on the dividend.
Albemarle Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.10 in 2014, and the most recent fiscal year payment was $1.62. This means that it has been growing its distributions at 3.9% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
The Company Could Face Some Challenges Growing The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Albemarle has seen EPS rising for the last five years, at 12% per annum. It's not an ideal situation that the company isn't turning a profit but the growth recently is a positive sign. Assuming the company can post positive net income numbers soon, it could has the potential to be a decent dividend payer.
Albemarle's Dividend Doesn't Look Sustainable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. Although they have been consistent in the past, we think the payments are a little high to be sustained. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Albemarle that investors need to be conscious of moving forward. 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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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.
About NYSE:ALB
Albemarle
Develops, manufactures, and markets engineered specialty chemicals worldwide.
Reasonable growth potential and fair value.
