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How Consistent Is APD’s Dividend?

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APD’s dividend yield

Dividend yield refers a company’s annual dividend per share relative to its price per share. The metric tells investors how much in returns they are getting for every dollar invested in a company’s equity. Long-term investors prefer stocks with higher dividend yields.

On June 16, 2017, APD closed at $145.51, which, considering the company’s current dividend rate, means that its current dividend yield is at 2.54%. This yield is better than Praxair’s (PX) current dividend yield of 2.30%.

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Since 2012, APD’s dividend yield has fallen from 3.3% to 2.54%. The decline has come primarily due to the increase in the stock’s price, which has outpaced dividend growth. If the trend continues, APD’s dividend yield could go down further, but APD’s dividend is still much higher than the yields received on the one-year Treasury bills.

Dividend payout

Dividend payout tells us how much net income is distributed to shareholders as a dividend. Dividend payout is usually expressed as a percentage and can be obtained by annual dividend per share by annual EPS (earnings per share)

Since 2012, APD’s dividend payout has ranged between 45% and 52.2%. However, APD will likely balance its payout ratio, as a higher payout would leave APD less room for future expansion and growth.

Notably, investors can indirectly hold APD by investing in the iShares US Basic Materials ETF (IYM), which has 5.4% of its portfolio in APD. IYM’s top holdings include Dow Chemical (DOW) and Du Pont (DD), which have weights of 12.20% and 12.1%, respectively.

In the next part, we’ll look at the latest analysts’ recommendations for APD.

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