Avient (NYSE:AVNT) Is Increasing Its Dividend To $0.2475

Avient Corporation (NYSE:AVNT) will increase its dividend from last year's comparable payment on the 6th of January to $0.2475. This will take the dividend yield to an attractive 2.8%, providing a nice boost to shareholder returns.

Our analysis indicates that AVNT is potentially undervalued!

Avient'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. However, Avient's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 19.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 32%, which is in the range that makes us comfortable with the sustainability of the dividend.

Avient Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.16 in 2012, and the most recent fiscal year payment was $0.99. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

Avient Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Avient has seen EPS rising for the last five years, at 5.4% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Avient Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Avient is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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 instance, we've picked out 1 warning sign for Avient that investors should take into consideration. Is Avient 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.