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How Attractive Is Eastman Chemical’s Dividend Yield?

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Eastman Chemical’s dividend yield

Investors who want steady income look for companies that have good dividend yields and better dividend growth. A dividend yield is what investors get in return for every dollar they invest in a company’s equity.

As EMN maintained the same dividend rate of $0.51 per share, EMN is expected to pay a dividend of $2.04 per share in fiscal 2017. As of September 12, 2017, EMN’s current dividend yield stood at 2.4%, while peers LyondellBasell (LYB), Westlake Chemical (WLK), and Huntsman (HUN) have current dividend yields of 3.9%, 1.1%, and 1.9%, respectively. With the exception of LyondellBasell, EMN’s dividend yield is better than its peers. Since 1Q14, EMN’s dividend yield has risen from 1.6% to 2.7% in 3Q16 primarily due to the combination of the increase in dividend rate and less growth in EMN’s stock price. However, from 4Q16, the dividend yield has shown a declining trend due to the increase in its share price from $75.21 at the end of 4Q16 to the current price of $86.20.

EMN’s dividend yield is higher than the yield on one-year Treasury bonds, thus making it an attractive option for long-term investors.

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Dividend payout trend

Eastman Chemical’s dividend payout has remained steady in the range of 28% to 32% from 2014 to 2016. This indicates that EMN’s dividend payout is neither too low nor too high in comparison to its peers. A lower payout suggests the company has retained more of its earnings, which could be used for future expansion and other financing activities.

Investors can invest in the First Trust Materials AlphaDEX Fund (FXZ) to hold Eastman Chemical indirectly. The fund has invested 2.7% of its portfolio in Eastman Chemical as of September 12, 2017.

In the next part, we’ll look into EMN’s latest recommendations from analysts.

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