ACCO Brands (NYSE:ACCO) Is Due To Pay A Dividend Of $0.075
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ACCO Brands Corporation (NYSE:ACCO) has announced that it will pay a dividend of $0.075 per share on the 18th of June. This means the annual payment is 7.8% of the current stock price, which is above the average for the industry.
ACCO Brands' Future Dividend Projections Seem Positive
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. While ACCO Brands is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. In general, cash flows are more important than the more traditional measures of profit so we feel pretty comfortable with the dividend at this level.
According to analysts, EPS should be several times higher next year. If the dividend continues along recent trends, we estimate the payout ratio will be 3.9%, so there isn't too much pressure on the dividend.
See our latest analysis for ACCO Brands
ACCO Brands Doesn't Have A Long Payment History
Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.30. This implies that the company grew its distributions at a yearly rate of about 3.2% over that duration. ACCO Brands hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.
The Dividend Has Limited Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. ACCO Brands' EPS has fallen by approximately 61% per year during the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
ACCO Brands' Dividend Doesn't Look Sustainable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.