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Interpreting Olin's Dividend Today

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Interpreting Olin's Dividend Today PART 1 OF 3

Behind Olin’s Dividend and Free Cash Flow in 3Q17

Olin declares a dividend for 3Q17

Olin (OLN) announced that it will pay its 3Q17 dividend on September 11, 2017. Olin has not made any changes to its dividend rate for the quarter. It will pay a dividend of $0.20 per share on its outstanding common shares.

Investors who held the shares on or before August 10 are entitled to the dividend. Peers LyondellBasell (LYB), Westlake Chemical (WLK), and Eastman Chemical (EMN) will pay a quarterly dividend of $0.90, $0.21, and $0.51 per share, respectively.

Behind Olin&#8217;s Dividend and Free Cash Flow in 3Q17

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Dividend growth

Olin will be paying its 363rd consecutive dividend. There is no change in OLN’s dividend rate on a YoY (year-over-year) basis, but it’s impressive that Olin has been consistently paying its quarterly dividend of $0.20 since 2000.

On an annual basis, Olin has been paying a dividend of $0.80 per share. Prior to this, Olin had paid an annual dividend of $0.90 in 1999.

Free cash flow

Positive free cash flow is important for companies to finance their dividend payments, debt repayments, share buy backs, and other financial activities. Here, we’ll convert Olin’s free cash flow into free cash per share.

Over the past five years, OLN’s free cash flow per share has grown from $0.29 in 2012 to $1.97 in 2016, implying a CAGR (compound annual growth rate) of 61.4%. By the end of 2Q17, OLN had generated free cash flow per share of $0.46 per share. As Olin has been maintaining a consistent dividend rate, OLN’s free cash flows can easily support Olin’s dividend.

Investors looking for exposure in Olin indirectly can invest in the PowerShares DWA Basic Materials Momentum Portfolio (PYZ), which had 3.4% of its portfolio in Olin on August 31, 2017.

In the next part, we’ll look into OLN’s dividend yield and dividend coverage.

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