Sealed Air (NYSE:SEE) Is Paying Out A Dividend Of $0.20

The board of Sealed Air Corporation (NYSE:SEE) has announced that it will pay a dividend on the 27th of September, with investors receiving $0.20 per share. This means that the annual payment will be 2.3% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Sealed Air

Sealed Air's Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Sealed Air was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 49.1% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

Sealed Air Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from $0.52 total annually to $0.80. This means that it has been growing its distributions at 4.4% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Sealed Air hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, a consistent dividend is a good thing, and we think that Sealed Air has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. Case in point: We've spotted 2 warning signs for Sealed Air (of which 1 makes us a bit uncomfortable!) you should know about. Is Sealed Air 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.