24 Feb

Why DuPont’s Dividend Yield Is Falling


DuPont’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 stable income.

On February 23, 2017, DuPont stock closed at $79.59. With DuPont’s declared 1Q17 dividend of $0.38 per share, DuPont’s current dividend yield stands at 1.9%. Peers Dow Chemical (DOW), LyondellBasell (LYB), and Eastman Chemical (EMN) have current dividend yields of 2.9%, 3.7%, and 2.5%, respectively.

Why DuPont’s Dividend Yield Is Falling

Since 2012, DuPont’s dividend yield has been falling. The decline in the dividend yield is primarily due to the combination of declining dividends and an increase in DuPont’s stock price. DD’s current dividend yield of 1.9% is still better than the yield on the one-year Treasury bill.

Dividend payout

Dividend payout can be calculated by dividing annual dividend per share by annual earnings per share (or EPS) and is expressed in percentage. This metric shows what percentage of its earnings the company is paying out as a dividend.

DuPont’s payout has been on a declining trend since 2011 with the exception of 2015. DuPont had a dividend payout ratio of 140.5% in 2012, and it dropped to 53.3% in 2016.

Investors can get exposure to DuPont by investing in the ProShares Ultra Basic Materials (UYM), which invests 8.1% of its holdings in DuPont as of February 23, 2017. In the next part, we’ll look into the latest analyst ratings for DuPont.

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