Air Products and Chemicals (NYSE:APD) Has Announced That It Will Be Increasing Its Dividend To $1.75
Air Products and Chemicals, Inc.'s (NYSE:APD) dividend will be increasing from last year's payment of the same period to $1.75 on 8th of May. Based on this payment, the dividend yield for the company will be 2.1%, which is fairly typical for the industry.
View our latest analysis for Air Products and Chemicals
Air Products and Chemicals' Earnings Easily Cover The Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Based on the last dividend, Air Products and Chemicals is earning enough to cover the payment, but then it makes up 474% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.
The next year is set to see EPS grow by 41.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 51% by next year, which is in a pretty sustainable range.
Air Products and Chemicals Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $2.56 in 2013 to the most recent total annual payment of $6.48. This means that it has been growing its distributions at 9.7% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Air Products and Chemicals has grown earnings per share at 14% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.
Overall, we always like to see the dividend being raised, but we don't think Air Products and Chemicals will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Air Products and Chemicals is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Air Products and Chemicals that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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