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DowDuPont Declares Another Post-Merger Dividend

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DowDuPont announces another dividend

On February 15, 2018, DowDuPont (DWDP) declared its second post-merger dividend. On March 15, DWDP expects to pay a dividend of $0.38 per share to shareholders of record on February 28, 2018. Before the merger, Dow and DuPont had been paying dividends since 1912 and 1904, respectively.

DowDuPont’s (DWDP) current dividend rate reflects a dividend yield of ~2.1% as of February 16, 2018. DWDP’s peers Monsanto (MON), Eastman Chemical (EMN), and LyondellBasell (LYB) have current dividend yields of 1.8%, ~2.3%, and 3.3%, respectively. 

Although DWDP’s yield is lower than some of its peers, it’s still higher than the yield from one-year Treasury notes. So, DWDP can be seen as an alternative option for investors.

At the end of 4Q17, DWDP had ~2.3 billion outstanding common shares. DWDP expects to pay ~$885.0 million in dividends, which assumes that no buybacks take place until the record date. DWDP’s current dividend rate represents a payout ratio of ~36.9% of the expected earnings per share for fiscal 2018.

Update on DWDP’s stock price

DowDuPont (DWDP) stock gained 3.6% and closed at $71.95 for the week ended February 16, 2018. These gains helped DWDP breach its 100-day moving average price of $71.89. 

On a year-to-date basis, DWDP stock has gained 1.0%. However, analysts are bullish on the stock and projected a target price of $83.75. This target price implies a return potential of 16.4% over its closing price of $71.95 on February 16, 2018. DWDP’s 14-day relative strength index(or RSI) of 49 indicates that the stock is neither overbought nor oversold.

Investors can indirectly hold DWDP by investing in the First Trust Index Global Agriculture ETF (FTAG). FTG invested 9.9% of its portfolio in DowDuPont on February 16, 2018.

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