We Wouldn't Be Too Quick To Buy P. H. Glatfelter Company (NYSE:GLT) Before It Goes Ex-Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see P. H. Glatfelter Company (NYSE:GLT) is about to trade ex-dividend in the next 4 days. Ex-dividend means that investors that purchase the stock on or after the 2nd of April will not receive this dividend, which will be paid on the 1st of May.
P. H. Glatfelter's next dividend payment will be US$0.13 per share, and in the last 12 months, the company paid a total of US$0.52 per share. Calculating the last year's worth of payments shows that P. H. Glatfelter has a trailing yield of 4.4% on the current share price of $11.73. If you buy this business for its dividend, you should have an idea of whether P. H. Glatfelter's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
View our latest analysis for P. H. Glatfelter
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. P. H. Glatfelter paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. With the recent loss, it's important to check if the business generated enough cash to pay its dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. Thankfully its dividend payments took up just 41% of the free cash flow it generated, which is a comfortable payout ratio.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. P. H. Glatfelter was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past ten years, P. H. Glatfelter has increased its dividend at approximately 3.7% a year on average.
Get our latest analysis on P. H. Glatfelter's balance sheet health here.
To Sum It Up
From a dividend perspective, should investors buy or avoid P. H. Glatfelter? It's hard to get used to P. H. Glatfelter paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. It's not that we think P. H. Glatfelter is a bad company, but these characteristics don't generally lead to outstanding dividend performance.
With that being said, if you're still considering P. H. Glatfelter as an investment, you'll find it beneficial to know what risks this stock is facing. Every company has risks, and we've spotted 3 warning signs for P. H. Glatfelter (of which 1 can't be ignored!) you should know about.
We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
