SunCoke Energy (NYSE:SXC) Has Announced A Dividend Of US$0.06

SunCoke Energy, Inc. (NYSE:SXC) will pay a dividend of US$0.06 on the 1st of June. This payment means that the dividend yield will be 2.8%, which is around the industry average.

See our latest analysis for SunCoke Energy

SunCoke Energy's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. However, SunCoke Energy's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 31.6%. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

SunCoke Energy's Dividend Has Lacked Consistency

Looking back, SunCoke Energy's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The first annual payment during the last 8 years was US$0.23 in 2014, and the most recent fiscal year payment was US$0.24. Dividend payments have grown at less than 1% a year over this period. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. SunCoke Energy has seen EPS rising for the last five years, at 17% per annum. SunCoke Energy definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

SunCoke Energy Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 4 warning signs for SunCoke Energy (1 makes us a bit uncomfortable!) that you should be aware of before investing. Is SunCoke Energy 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.