Eastman Chemical (NYSE:EMN) Has Announced That It Will Be Increasing Its Dividend To $0.83

Eastman Chemical Company (NYSE:EMN) has announced that it will be increasing its periodic dividend on the 8th of January to $0.83, which will be 2.5% higher than last year's comparable payment amount of $0.81. This takes the dividend yield to 3.2%, which shareholders will be pleased with.

See our latest analysis for Eastman Chemical

Eastman Chemical's Projected Earnings Seem Likely To Cover Future Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Eastman Chemical was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

The next year is set to see EPS grow by 30.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 35% by next year, which is in a pretty sustainable range.

Eastman Chemical Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.40 in 2014, and the most recent fiscal year payment was $3.24. This implies that the company grew its distributions at a yearly rate of about 8.8% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Eastman Chemical's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Eastman Chemical has seen EPS rising for the last five years, at 6.6% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

We Really Like Eastman Chemical's Dividend

Overall, a dividend increase is always good, and we think that Eastman Chemical is a strong income stock thanks to its track record and growing earnings. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Eastman Chemical 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.

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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.