Wolverine World Wide, Inc. (NYSE: WWW) announced that it will pay a dividend of $ 0.10 per share on August 2. This means that the dividend yield will be fairly typical at 1.1%.
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Wolverine World Wide May Struggle To Maintain Dividend
Unless the payments are sustainable, the dividend yield doesn’t mean too much. Even though Wolverine World Wide doesn’t make a profit, it does generate healthy free cash flow that easily covers the dividend. This reassures us about the level of dividend payments.
Over the next year EPS could decline 16.2% based on recent performance. This means that the company will not make a profit over the next year or so, but with healthy cash flow at the moment, the dividend could still be maintained.
Wolverine World Wide has a strong track record
Even over a long history of paying dividends, the company’s distributions have been remarkably stable. The first annual payment in the past 10 years was $ 0.22 in 2011, and the most recent year payment was $ 0.40. This means that he increased his distributions to 6.2% per annum during that period. The dividend has progressed very well for several years and has provided its shareholders with good income in their portfolios.
The dividend has limited growth potential
Investors might be attracted to the stock depending on the quality of its payment history. Let’s not jump to conclusions because things might not be as good as they appear on the surface. Over the past five years, it appears that Wolverine World Wide’s BPA has declined by around 16% per year. Dividend payments are likely to come under some pressure unless EPS can get out of the dive it’s in.
In summary, while it is good to see that the dividend has not been reduced, we are a little cautious about Wolverine World Wide payouts as there could be issues maintaining them going forward. Payments haven’t been particularly stable and we don’t see huge growth potential, but with the dividend well covered by cash flow, it could prove to be reliable in the short term. We would probably look elsewhere for an income investment.
Companies with a stable dividend policy are likely to benefit from greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, these aren’t the only factors our readers should be aware of when evaluating a business. Just as an example we have encountered 3 warning signs for Wolverine World Wide you should be aware of that, and one of them doesn’t suit us very well. Looking for more high yield dividend ideas? Try our organized list of good dividend payers.
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