Yahoo Finance Be Sure To Check Out Hyster-Yale Materials Handling, Inc. (NYSE:HY) Before It Goes Ex-Dividend
Hyster-Yale Materials Handling, Inc. (NYSE:HY) is about to trade ex-dividend in the next four days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company's books as a shareholder in order to receive the dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Accordingly, Hyster-Yale Materials Handling investors that purchase the stock on or after the 31st of May will not receive the dividend, which will be paid on the 14th of June.
The company's next dividend payment will be US$0.35 per share. Last year, in total, the company distributed US$1.30 to shareholders. Last year's total dividend payments show that Hyster-Yale Materials Handling has a trailing yield of 1.7% on the current share price of US$75.48. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for Hyster-Yale Materials Handling
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Hyster-Yale Materials Handling is paying out just 15% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. The good news is it paid out just 18% of its free cash flow in the last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. It's encouraging to see Hyster-Yale Materials Handling has grown its earnings rapidly, up 33% a year for the past five years. Hyster-Yale Materials Handling earnings per share have been sprinting ahead like the Road Runner at a track and field day; scarcely stopping even for a cheeky "beep-beep". We also like that it is reinvesting most of its profits in its business.'
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Hyster-Yale Materials Handling has delivered 2.7% dividend growth per year on average over the past 10 years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.
The Bottom Line
Should investors buy Hyster-Yale Materials Handling for the upcoming dividend? Hyster-Yale Materials Handling has been growing earnings at a rapid rate, and has a conservatively low payout ratio, implying that it is reinvesting heavily in its business; a sterling combination. Hyster-Yale Materials Handling looks solid on this analysis overall, and we'd definitely consider investigating it more closely.
While it's tempting to invest in Hyster-Yale Materials Handling for the dividends alone, you should always be mindful of the risks involved. To help with this, we've discovered 3 warning signs for Hyster-Yale Materials Handling (1 makes us a bit uncomfortable!) that you ought to be aware of before buying the shares.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
