Ball (NYSE:BALL) Will Pay A Dividend Of $0.20

Ball Corporation (NYSE:BALL) has announced that it will pay a dividend of $0.20 per share on the 15th of December. This payment means the dividend yield will be 1.7%, which is below the average for the industry.

See our latest analysis for Ball

Ball's Dividend Is Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Ball is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to expand by 30.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

Ball Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.26 in 2013 to the most recent total annual payment of $0.80. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Ball has seen EPS rising for the last five years, at 14% per annum. Ball definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Ball's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Ball is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Ball that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.