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Air Products and Chemicals’ Quarterly Dividend

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Air Products and Chemicals’ latest quarterly dividend

Air Products and Chemicals (APD) has declared its regular quarterly cash dividend. To be eligible for the dividend, investors should hold Air Products and Chemicals’ shares as of the close on January 2. The company is expected to pay the dividend on February 11.

Air Products and Chemicals has declared a dividend of $1.10 per share, which represents an increase of 15.8% on a YoY (year-over-year) basis. However, there wasn’t a change compared to the company’s previous quarterly dividend. Linde (LIN), Celanese (CE), and Eastman Chemical (EMN) paid their latest quarterly dividends of ~$0.825, $0.54, and $0.62, respectively. In the past four years, Air Products and Chemicals’ dividend has grown at a compound annual growth rate of 9.3%.

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At the end of Air Products and Chemicals’ fiscal 2018 (APD follows October to September as its reporting period), the number of outstanding shares stood at 220.8 million. Assuming that Air Products and Chemicals doesn’t buy back any shares until the record date, it will be paying a dividend of $242.9 million.

Free cash flow

Are Air Products and Chemicals’ dividend growth and dividend payments supported by its free cash flow?

Air Products and Chemicals has been generating positive free cash flows. Since 2014, Air Products and Chemicals has been generating an average free cash flow of ~976.2 million. Since dividends are generally paid out of free cash flows, most of the company’s free cash flows are used to pay dividends. From 2014, on an average, 87.6% of the free cash flows have been used to pay dividends. As a result, Air Products and Chemicals will have less cash left over. The cash can be used for financing other activities.

Investors could hold Air Products and Chemicals indirectly by investing in the Materials Select Sector SPDR ETF (XLB). XLB has invested 6.0% of its portfolio in Air Products and Chemicals as of December 27.

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