Lumen Technologies (NYSE:LUMN) Is Due To Pay A Dividend Of US$0.25

Lumen Technologies, Inc. (NYSE:LUMN) will pay a dividend of US$0.25 on the 11th of June. This means the annual payment is 7.0% of the current stock price, which is above the average for the industry.

View our latest analysis for Lumen Technologies

Lumen Technologies' Distributions May Be Difficult To Sustain

If the payments aren't sustainable, a high yield for a few years won't matter that much. Even though Lumen Technologies isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. This gives us some comfort about the level of the dividend payments.

Recent, EPS has fallen by 36.1%, so this could continue over the next year. This means that the company won't turn a profit over the next year, but with healthy cash flows at the moment the dividend could still be okay to continue.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from US$2.90 in 2011 to the most recent annual payment of US$1.00. The dividend has fallen 66% over that period. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth Potential Is Shaky

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Lumen Technologies' earnings per share has shrunk at 36% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

Lumen Technologies' 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 Lumen Technologies' payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

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. For example, we've identified 3 warning signs for Lumen Technologies (1 is concerning!) that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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