Corning Incorporated (NYSE:GLW) will increase its dividend from last year’s comparable payment on the 15th of December to $0.28. This makes the dividend yield 3.8%, which is above the industry average.
See our latest analysis for Corning
Corning’s Dividend Is Well Covered By Earnings
We like to see robust dividend yields, but that doesn’t matter if the payment isn’t sustainable. Prior to this announcement, the company was paying out 148% of what it was earning. This situation certainly isn’t ideal, and could place significant strain on the balance sheet if it continues.
Analysts expect a massive rise in earnings per share in the next year. If recent patterns in the dividend continue, we could see the payout ratio reaching 48% which is fairly sustainable.
Corning Has A Solid Track Record
Even over a long history of paying dividends, the company’s distributions have been remarkably stable. Since 2013, the dividend has gone from $0.36 total annually to $1.12. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is good to see that there has been strong dividend growth, and that there haven’t been any cuts for a long time.
Corning’s Dividend Might Lack Growth
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. Corning has seen EPS rising for the last five years, at 19% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.
Corning’s Dividend Doesn’t Look Sustainable
Overall, we always like to see the dividend being raised, but we don’t think Corning will make a great income stock. Although they have been consistent in the past, we think the payments are a little high to be sustained. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we’ve come across 5 warning signs for Corning you should be aware of, and 1 of them shouldn’t be ignored. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
Valuation is complex, but we’re helping make it simple.
Find out whether Corning is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
