Ashland Global Holdings Inc. (NYSE:ASH) Is About To Go Ex-Dividend, And It Pays A 1.4% Yield
Ashland Global Holdings Inc. (NYSE:ASH) stock is about to trade ex-dividend in 4 days time. Investors can purchase shares before the 27th of February in order to be eligible for this dividend, which will be paid on the 15th of March.
Ashland Global Holdings’s next dividend payment will be US$0.28 per share. Last year, in total, the company distributed US$1.10 to shareholders. Calculating the last year’s worth of payments shows that Ashland Global Holdings has a trailing yield of 1.4% on the current share price of $81.23. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. As a result, readers should always check whether Ashland Global Holdings has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Ashland Global Holdings
If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Ashland Global Holdings paid out 51% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. It paid out more than half (60%) of its free cash flow in the past year, which is within an average range for most companies.
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.
NYSE:ASH Historical Dividend Yield, February 22nd 2020
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it’s easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Fortunately for readers, Ashland Global Holdings’s earnings per share have been growing at 18% a year for the past five years. Ashland Global Holdings has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. Given the quick rate of earnings per share growth and current level of payout, there may be a chance of further dividend increases in the future.
Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, ten years ago, Ashland Global Holdings has lifted its dividend by approximately 14% a year on average. It’s exciting to see that both earnings and dividends per share have grown rapidly over the past few years.
To Sum It Up
Should investors buy Ashland Global Holdings for the upcoming dividend? It’s good to see earnings are growing, since all of the best dividend stocks grow their earnings meaningfully over the long run. However, we’d also note that Ashland Global Holdings is paying out more than half of its earnings and cash flow as profits, which could limit the dividend growth if earnings growth slows. Overall, it’s not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
