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Eastman Chemical's Latest Dividend: A Key Analysis

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Part 3
Eastman Chemical's Latest Dividend: A Key Analysis PART 3 OF 5

Eastman Chemical’s Dividend Yield in Context

Eastman Chemical’s dividend yield

A dividend yield is a measure of a company’s annual dividend per share relative to its price per share. It indicates how much cash an investor is getting for every dollar invested in a company’s equity. A high dividend yield is a good sign, as it provides investors with a stable income.

As of March 28, 2017, Eastman Chemical’s (EMN) stock price closed at $79.83. With Eastman Chemical declaring a quarterly dividend of $0.51 per share, its current dividend yield stands at 2.6%. Peers Dow Chemical (DOW), DuPont (DD), and LyondellBasell (LYB) have current dividend yields of 2.9%, 1.9%, and 3.8%, respectively.

Eastman Chemical&#8217;s Dividend Yield in Context

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EMN’s dividend yield since 2011 has remained consistent in the range of 1.5%–2.5%. What’s clear is that EMN’s stock price has been more volatile, but its dividend growth has ensured that investors are getting a good yield. EMN’s consistent dividend yield is still higher than the one-year Treasury yield, which appears to have made it an attractive investment option.

Dividend payout

A company’s dividend payout can be calculated by dividing annual dividends per share by annual EPS (earnings per share) and is expressed as a percentage. The dividend payout tells investors what percentage of earnings the company is paying out as a dividend.

Since 2011, EMN’s dividend payout has varied in the range of 21%–32% and has shown a rising trend, indicating a good sign for investors. At the same time, EMN’s better retention rate will help the company with more cash for future growth and expansions.

Notably, investors can indirectly hold EMN by investing in the Materials Select Sector SPDR ETF (XLB), which had 2.1% of its holdings in EMN on March 28, 2017.

In the next part, we’ll examine the latest analyst ratings for Eastman Chemical.

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