Kennedy-Wilson Holdings' (NYSE:KW) Dividend Will Be $0.24

The board of Kennedy-Wilson Holdings, Inc. (NYSE:KW) has announced that it will pay a dividend on the 6th of July, with investors receiving $0.24 per share. The dividend yield will be 5.7% based on this payment which is still above the industry average.

Check out our latest analysis for Kennedy-Wilson Holdings

Kennedy-Wilson Holdings Is Paying Out More Than It Is Earning

A big dividend yield for a few years doesn't mean much if it can't be sustained. Kennedy-Wilson Holdings is unprofitable despite paying a dividend, and it is paying out 540% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.

The next 12 months is set to see EPS grow by 129.0%. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

Kennedy-Wilson Holdings Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was $0.20, compared to the most recent full-year payment of $0.96. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Kennedy-Wilson Holdings May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Although it's important to note that Kennedy-Wilson Holdings' earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. With EPS growth hard to come by and the company not turning a profit, we wouldn't be particularly optimistic about the growth prospects for Kennedy-Wilson Holdings' dividend in the future.

Kennedy-Wilson Holdings' Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Kennedy-Wilson Holdings' payments, as there could be some issues with sustaining them into the future. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Kennedy-Wilson Holdings that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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