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DuPont’s Falling Dividend Yield: A Cause for Concern?

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May. 31 2017, Updated 3:35 p.m. ET

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 provides investors with a stable income.

On May 30, 2017, DuPont stock closed at $77.68. Given DuPont’s fiscal 2Q17 dividend of $0.38 per share, its current dividend yield stands at 2.0%. Peers Dow Chemical (DOW), LyondellBasell Industries (LYB), and Eastman Chemical Company (EMN) have current dividend yields of 3.0%, 4.4%, and 2.6%, respectively.

DuPont’s dividend yield has been falling since 2011. The fall in the dividend yield has primarily been due to the combination of falling dividends and the rise in DuPont’s stock price. 

DD’s current dividend yield of 2.0% is still better than the yield on the 1-year Treasury bill.

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Dividend payout

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

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

Investors can get exposure to DuPont by investing in the ProShares Ultra Basic Materials ETF (UYM), which invested 8.1% of its holdings in DuPont as of May 30, 2017. In the next article, we’ll look into analysts’ latest ratings for DuPont.

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