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What Huntsman’s Inconsistent Dividend Means to Investors

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Huntsman’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.

On March 16, 2017, Huntsman’s (HUN) stock price closed at $22.55. With HUN declaring a 1Q17 quarterly dividend of $0.125 per share, HUN’s current dividend yield now stands at 2.21%. By comparison, HUN’s peers’ Dow Chemical (DOW), Eastman Chemical (EMN), and LyondellBasell (LYB) have current dividend yields of 2.88%, 2.63%, and 3.84%, respectively.

Since 2011, HUN’s dividend yield has fluctuated in the range of 2.0% to 4.0%, primarily due to the volatility of its stock price that hovered between $10 to $24 during this period. Despite the volatility in its dividend yield, HUN’s dividend yield has managed to outperform the yields from its one-year treasury bonds, providing an option for investors seeking higher returns.

Dividend payout

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

Since 2011, HUN’s dividend payout has majorly been in the range of 26%–39%, with the exceptions of 2013 and 2015, due to declines in reported earnings per share. HUN’s payout indicates that higher income retention could be due to possible future growth and expansions.

Notably, investors can indirectly hold HUN by investing in the PowerShares Russell Midcap Pure Value Portfolio ETF (PXMV), which had 0.8% of its holding in HUN on March 16, 2017.

In the next and final part of this series, we’ll look into the latest analyst ratings for Huntsman.

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