Crown Holdings' (NYSE:CCK) Shareholders Will Receive A Bigger Dividend Than Last Year

Crown Holdings, Inc. (NYSE:CCK) has announced that it will be increasing its periodic dividend on the 28th of March to $0.25, which will be 4.2% higher than last year's comparable payment amount of $0.24. Even though the dividend went up, the yield is still quite low at only 1.2%.

View our latest analysis for Crown Holdings

Crown Holdings' Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Crown Holdings was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 76.6%. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

Crown Holdings Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The annual payment during the last 3 years was $0.80 in 2021, and the most recent fiscal year payment was $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 6.3% a year over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

Crown Holdings May Find It Hard To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 2.7% a year for the past five years, which isn't massive but still better than seeing them shrink. If Crown Holdings is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Our Thoughts On Crown Holdings' Dividend

Overall, this is a reasonable dividend, and it being raised is an added bonus. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for Crown Holdings you should be aware of, and 1 of them makes us a bit uncomfortable. Is Crown 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.