Quaker Chemical (NYSE:KWR) Will Pay A Larger Dividend Than Last Year At $0.485

Quaker Chemical Corporation (NYSE:KWR) will increase its dividend from last year's comparable payment on the 31st of October to $0.485. Even though the dividend went up, the yield is still quite low at only 1.1%.

See our latest analysis for Quaker Chemical

Quaker Chemical's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Quaker Chemical was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 23.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.

Quaker Chemical Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $1.00, compared to the most recent full-year payment of $1.82. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year 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.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. Quaker Chemical has impressed us by growing EPS at 10% per year over the past five years. Quaker Chemical definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Quaker Chemical's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 6 analysts we track are forecasting for Quaker Chemical for free with public analyst estimates for the company. 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.

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