Huntsman's (NYSE:HUN) Upcoming Dividend Will Be Larger Than Last Year's

Huntsman Corporation (NYSE:HUN) will increase its dividend on the 29th of March to $0.25, which is 5.3% higher than last year's payment from the same period of $0.238. This will take the annual payment to 3.7% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for Huntsman

Huntsman's Distributions May Be Difficult To Sustain

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Even in the absence of profits, Huntsman is paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.

EPS is set to fall dramatically over the next 12 months. This means that the company will be unprofitable and it could face the difficult decision of satisfying income-seeking shareholders or putting additional pressure on its balance sheet.

Huntsman Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.50 in 2014, and the most recent fiscal year payment was $0.95. This means that it has been growing its distributions at 6.6% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Huntsman Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Huntsman has been growing its earnings per share at 8.1% a year over the past five years. Even though the company isn't making a profit, strong earnings growth could turn that around in the near future. As long as the company becomes profitable soon, it is on a trajectory that could see it being a solid dividend payer.

The Dividend Could Prove To Be Unreliable

Overall, we always like to see the dividend being raised, but we don't think Huntsman will make a great income stock. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Huntsman that investors should know about before committing capital to this stock. Is Huntsman 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.