Huntsman’s 3Q17 dividend
Huntsman (HUN) has declared a 3Q17 dividend of $0.13 per share, and is expected to pay it on September 29, 2017, to shareholders as of September 15. Peers Eastman Chemical (EMN), Westlake Chemical (WLK), and Chemours (CC) have declared quarterly dividends of $0.51, $0.21, and $0.03 per share, respectively.
Huntsman’s dividend growth
It has been quite some time since Huntsman has increased its quarterly dividend. It last increased it in 1Q13. However, the current dividend rate represents no growth from last year. Assuming no change in the dividend rate, we can expect Huntsman to pay a fiscal 2017 dividend of $0.50 per share. Since 2012, Huntsman’s dividend has risen at a CAGR (compound annual growth rate) of 4.6%.
Huntsman’s free cash flow
A company needs positive free cash flow to support financial activities such as debt repayments, dividend payments, expansion, and share buybacks. We have yet to see if Huntsman’s free cash flow can support its dividend plan and dividend growth. At the end of 2Q17, Huntsman had free cash flow per share of $1.36. From 2012 to 2016, Huntsman’s free cash flow per share rose at a CAGR of 17.5%, which was higher than its dividend growth. Huntsman’s strong free cash flow could support its dividend plan.
Investors could consider the First Trust Materials AlphaDEX ETF (FXZ) to hold Huntsman indirectly. The fund had invested 2.8% of its portfolio in Huntsman as of September 13, 2017. In the next part, we’ll look at Huntsman’s dividend yield and payout.