Stock Analysis

Graphic Packaging Holding (NYSE:GPK) Is Due To Pay A Dividend Of $0.075

  •  Updated
NYSE:GPK
Source: Shutterstock

Graphic Packaging Holding Company's (NYSE:GPK) investors are due to receive a payment of $0.075 per share on 5th of October. The dividend yield is 1.4% based on this payment, which is a little bit low compared to the other companies in the industry.

Check out our latest analysis for Graphic Packaging Holding

Graphic Packaging Holding's Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Graphic Packaging Holding is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

The next year is set to see EPS grow by 174.4%. If the dividend continues on this path, the payout ratio could be 13% by next year, which we think can be pretty sustainable going forward.

historic-dividend
NYSE:GPK Historic Dividend August 6th 2022

Graphic Packaging Holding Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The annual payment during the last 8 years was $0.20 in 2014, and the most recent fiscal year payment was $0.30. This implies that the company grew its distributions at a yearly rate of about 5.2% over that duration. Graphic Packaging Holding has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Graphic Packaging Holding has seen EPS rising for the last five years, at 11% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Graphic Packaging Holding's prospects of growing its dividend payments in the future.

Our Thoughts On Graphic Packaging Holding's Dividend

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While Graphic Packaging Holding is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.

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. To that end, Graphic Packaging Holding has 3 warning signs (and 1 which is a bit concerning) we think you should know about. Is Graphic Packaging Holding not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Valuation is complex, but we're helping make it simple.

Find out whether Graphic Packaging Holding is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About NYSE:GPK

Graphic Packaging Holding

Graphic Packaging Holding Company, together with its subsidiaries, provides fiber-based packaging solutions to food, beverage, foodservice, and other consumer products companies.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation2
Future Growth3
Past Performance4
Financial Health2
Dividends2

Read more about these checks in the individual report sections or in our analysis model.

Proven track record with moderate growth potential.