NACCO Industries (NYSE: NC) to pay larger dividend than last year at $ 0.20
NACCO Industries, Inc. (NYSE: NC) will increase its dividend on June 15 to US $ 0.20. This brings the annual payout to 3.2% of the current share price, which is sadly less than what the industry is paying.
Check out our latest review for NACCO Industries
NACCO Industries payment provides strong revenue coverage
The dividend yield is a bit low, but the sustainability of payments is also an important part of valuing an income stock. NACCO Industries earns easily enough to cover the dividend, but is disappointed with the low cash flow. We believe cash flow should take priority over earnings, so that’s definitely a concern for the dividend going forward.
Going forward, EPS could drop 6.2% if the company can’t turn the tide in recent years. If the dividend continues according to recent trends, we estimate the payout ratio could be 31%, which we consider to be quite comfortable, with most of the company’s earnings remaining to grow the business in the future.
Although the company has a long history of dividends, it has been cut at least once in the past 10 years. The first annual payment in the past 10 years was $ 2.09 in 2011, and the most recent year payment was $ 0.79. The dividend has decreased by approximately 9.3% per annum during this period. A business that decreases its dividend over time is usually not what we are looking for.
Dividend growth can be hard to achieve
Since dividend payments have shrunk like a glacier in a warming world, we need to check if there are any bright spots on the horizon. It’s not great to see that NACCO Industries’ earnings per share have fallen about 6.2% per year over the past five years. A slight drop in profits is not terrible, and the dividend is unlikely to increase in the future unless this trend can be reversed.
The dividend could prove to be unreliable
Overall, we still like to see the dividend go up, but we don’t think NACCO Industries will make a good income from equities. The company hasn’t paid a very consistent dividend over time, although it pays only a small portion of the profits. This company is not part of the first income level providing shares.
Firms with a stable dividend policy will likely benefit from greater investor interest than those with a more inconsistent approach. However, there are other things for investors to consider when analyzing stock performance. For example, we have chosen 3 warning signs for NACCO Industries that investors should know before committing any capital to this stock. We have also set up a list of global stocks with a solid dividend.
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