NYSE:AWI) stock is about to trade ex-dividend in 4 days. You can purchase shares before the 5th of August in order to receive the dividend, which the company will pay on the 20th of August.” data-reactid=”28″>Armstrong World Industries, Inc. (NYSE:AWI) stock is about to trade ex-dividend in 4 days. You can purchase shares before the 5th of August in order to receive the dividend, which the company will pay on the 20th of August.
Armstrong World Industries’s next dividend payment will be US$0.20 per share, and in the last 12 months, the company paid a total of US$0.80 per share. Based on the last year’s worth of payments, Armstrong World Industries stock has a trailing yield of around 1.1{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} on the current share price of $71.71. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Armstrong World Industries ” data-reactid=”30″> See our latest analysis for Armstrong World Industries
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Armstrong World Industries reported a loss after tax last year, which means it’s paying a dividend despite being unprofitable. While this might be a one-off event, this is unlikely to be sustainable in the long term. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If cash earnings don’t cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out 25{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} of its free cash flow as dividends last year, which is conservatively low.
here to see the company’s payout ratio, plus analyst estimates of its future dividends.” data-reactid=”36″>Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Armstrong World Industries reported a loss last year, but at least the general trend suggests its income has been improving over the past five years. Even so, an unprofitable company whose business does not quickly recover is usually not a good candidate for dividend investors.
Many investors will assess a company’s dividend performance by evaluating how much the dividend payments have changed over time. In the past two years, Armstrong World Industries has increased its dividend at approximately 6.9{5667a53774e7bc9e4190cccc01624aae270829869c681dac1da167613dca7d05} a year on average. We’re glad to see dividends rising alongside earnings over a number of years, which may be a sign the company intends to share the growth with shareholders.
by checking our visualisation of its financial health, here.” data-reactid=”52″>Remember, you can always get a snapshot of Armstrong World Industries’s financial health, by checking our visualisation of its financial health, here.
To Sum It Up
Is Armstrong World Industries worth buying for its dividend? We’re a bit uncomfortable with it paying a dividend while being loss-making. However, we note that the dividend was covered by cash flow. Overall, it’s hard to get excited about Armstrong World Industries from a dividend perspective.
1 warning sign for Armstrong World Industries you should be aware of.” data-reactid=”55″>In light of that, while Armstrong World Industries has an appealing dividend, it’s worth knowing the risks involved with this stock. Case in point: We’ve spotted 1 warning sign for Armstrong World Industries you should be aware of.
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Get in touch with us directly. Alternatively, email [email protected].” data-reactid=”61″>This article by Simply Wall St is general in nature. 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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