Kennedy-Wilson Holdings (NYSE:KW) Is Due To Pay A Dividend Of $0.24

Kennedy-Wilson Holdings, Inc. (NYSE:KW) has announced that it will pay a dividend of $0.24 per share on the 5th of January. This means the annual payment is 5.9% of the current stock price, which is above the average for the industry.

Our analysis indicates that KW is potentially overvalued!

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

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, the company was paying out 165% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

The next 12 months is set to see EPS grow by 60.8%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 113% over the next year.

Kennedy-Wilson Holdings 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 $0.16 in 2012, and the most recent fiscal year payment was $0.96. This implies that the company grew its distributions at a yearly rate of about 20% 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 Might Find It Hard To 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. We are encouraged to see that Kennedy-Wilson Holdings has grown earnings per share at 35% per year over the past five years. Although earnings per share is up nicely Kennedy-Wilson Holdings is paying out 165% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

The Dividend Could Prove To Be Unreliable

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. 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. We would probably look elsewhere for an income investment.

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 Kennedy-Wilson Holdings (2 can't be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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