DuPont Set to Pay Its 450th Consecutive Quarterly Dividend

On January 27, 2017, DuPont (DD) declared a dividend of $0.38 per share for 1Q17 on the company’s outstanding common stock. The dividend will be payable on March 14, 2017. DuPont has set February 15, 2017, as the record date. This is DD’s 450th consecutive quarterly dividend. DD declared its first dividend in the fourth quarter of 1904.

Along with the common stock dividends, DuPont is also paying quarterly dividends on its $4.50 and $3.50 preferred stock series of $1.13 and $0.88, respectively. Both these dividends are payable on April 25, 2017, to shareholders with a record date of April 10, 2017.

In the past two years, the news for DuPont’s shareholders hasn’t been good, as DD’s annual dividend is on a declining trend. In 2015, DD reduced its dividend by 6.5%. It reduced dividends by another 11.6% in 2016. In contrast, DD peer Dow Chemical (DOW) has increased its dividends at a CAGR (compound annual growth rate) of 15.4% in the past five years.

It’s important for investors whether a company is generating enough free cash flow to sustain dividend growth, as dividends are usually paid out of free cash flows. In the past six years, DuPont’s free cash flow has been very inconsistent. For our analysis, we’ll consider the free cash flow generated by DuPont and convert it to free cash flow per share. The free cash flow per share of DuPont has fallen from $3.51 in 2011 to $2.60 in 2016, which could be the reason why DuPont’s dividend has fallen in the past two years.

Investors can get exposure to DuPont through the Vanguard Materials ETF (VAW), which invests 8.2% of its holdings in DuPont. The top holdings of the fund include Monsanto (MON) and Praxair (PX), which have weights of 5.8% and 4.0% in the ETF, respectively, as of February 23, 2017.

In the next part, we’ll look into DuPont’s dividend payout and the current dividend yield.