DuPont de Nemours (NYSE:DD) Is Increasing Its Dividend To $0.38

DuPont de Nemours, Inc. (NYSE:DD) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of March to $0.38. This makes the dividend yield about the same as the industry average at 2.3%.

See our latest analysis for DuPont de Nemours

DuPont de Nemours' Earnings Easily Cover The Distributions

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. Paying out such a large dividend compared to earnings while also not generating any free cash flow would definitely be difficult to keep up.

According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 29%, which is in a comfortable range for us.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the dividend has gone from $3.84 total annually to $1.52. This works out to be a decline of approximately 8.9% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.

DuPont de Nemours' Dividend Might Lack Growth

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. DuPont de Nemours has impressed us by growing EPS at 30% per year over the past five years. Although earnings per share is up nicely DuPont de Nemours is paying out 131% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

DuPont de Nemours' Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think DuPont de Nemours' payments are rock solid. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We don't think DuPont de Nemours is a great stock to add to your portfolio if income is your focus.

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. Just as an example, we've come across 3 warning signs for DuPont de Nemours you should be aware of, and 1 of them is a bit concerning. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.