Compass Minerals International (NYSE:CMP) Has Affirmed Its Dividend Of $0.15

The board of Compass Minerals International, Inc. (NYSE:CMP) has announced that it will pay a dividend of $0.15 per share on the 20th of March. Based on this payment, the dividend yield will be 2.6%, which is fairly typical for the industry.

View our latest analysis for Compass Minerals International

Compass Minerals International's Dividend Is Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. Even in the absence of profits, Compass Minerals International is paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 18%, which makes us pretty comfortable with the sustainability of the dividend.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was $2.18 in 2014, and the most recent fiscal year payment was $0.60. This works out to a decline of approximately 72% over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

The Dividend Has Limited Growth Potential

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. Compass Minerals International's earnings per share has shrunk at 50% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

We're Not Big Fans Of Compass Minerals International's Dividend

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Compass Minerals International make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, this doesn't get us very excited from an income standpoint.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for Compass Minerals International 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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