AdvanSix's (NYSE:ASIX) Dividend Will Be $0.16

The board of AdvanSix Inc. (NYSE:ASIX) has announced that it will pay a dividend on the 26th of August, with investors receiving $0.16 per share. This makes the dividend yield 3.3%, which will augment investor returns quite nicely.

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AdvanSix's Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, AdvanSix was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 25.5% over the next 12 months. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for AdvanSix

AdvanSix Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2021, the annual payment back then was $0.50, compared to the most recent full-year payment of $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 6.4% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider AdvanSix to be a consistent dividend paying stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that AdvanSix has been growing its earnings per share at 25% a year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

We Really Like AdvanSix's Dividend

Overall, we like to see the dividend staying consistent, and we think AdvanSix might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for AdvanSix that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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