Duncan Mosjik- Wolverine World Wide will pay a dividend of $0.10 per share, yielding 1.9%, aligned with industry standards.
- The company is not currently profitable, though there is optimism for a rebound in earnings next year.
- With a payout ratio of 13%, the current dividend level is sustainable, posing little risk to future payments.
- Wolverine has shown consistent growth in its dividend, increasing from $0.24 in 2015 to $0.40, equating to a 5.2% CAGR.
- Despite a strong dividend history, a 40% drop in earnings per share over five years raises uncertainties about future growth.
- Income-seeking investors should remain cautious and consider alternatives due to potential risks.
Wolverine World Wide, Inc. (NYSE:WWW) is set to delight investors with a $0.10 per share dividend on May 1, translating to a 1.9% yield—right around the industry average. But is this dividend a sign of strength or caution?
Despite the buzz, let’s dig beneath the surface. While Wolverine is generating healthy free cash flow that covers this dividend, it’s crucial to note that the company isn’t currently turning a profit. Analysts are optimistic, forecasting a massive rebound in earnings per share next year. Currently, the payout ratio sits at a manageable 13%, indicating limited pressure on future payments.
The historical context adds layers to this debate. Over the last several years, Wolverine has managed consistent growth in its dividend payments, from $0.24 annually in 2015 to $0.40 recently, reflecting a steady 5.2% compound annual growth rate (CAGR). This track record certainly impresses but raises a red flag: earnings per share have plummeted by nearly 40% in five years. Without a revival in profits, this growth could stall.
In the grand scheme, Wolverine World Wide may not be the best pick for income-seeking investors. With a stable dividend payout history, there’s potential, but it’s tempered by earnings instability and future uncertainties. For those contemplating this stock, vigilance is key. Stay informed about potential risks, and perhaps explore more robust dividend opportunities elsewhere.
Will Wolverine rise again or continue to stumble? Only time will tell!
Wolverine World Wide: A Closer Look at Dividends, Growth, and Risks!
Overview
Wolverine World Wide, Inc. (NYSE: WWW) is attracting attention with its upcoming $0.10 per share dividend on May 1, which offers a 1.9% yield that aligns with the industry average. However, investors must consider whether this dividend reflects the company’s strength or if it is indicative of underlying issues.
Key Insights
1. Dividend Sustainability:
– Wolverine’s free cash flow currently supports the dividend payments, which is positive for investors. The payout ratio is approximately 13%, suggesting that the dividend is well-covered and poses limited risk to future payments.
2. Earnings Forecast:
– Despite financial challenges, analysts are predicting a significant earnings rebound next year, which could bolster Wolverine’s financial stability. However, the company has experienced a 40% decrease in earnings per share over the past five years, which raises caution about future profitability.
3. Growth History:
– Historically, Wolverine has exhibited a steady growth in dividends, increasing from $0.24 annually in 2015 to $0.40 recently, showcasing a 5.2% compound annual growth rate (CAGR). This growth trajectory is impressive but also highlights the volatility in earnings, which could affect future dividend growth.
Pros and Cons
– Pros:
– Strong historical dividend growth.
– Low payout ratio, providing a buffer for future payments.
– Positive analyst outlook on earnings recovery.
– Cons:
– Current lack of profitability.
– Significant decline in earnings per share.
– Market uncertainties that could impact future performance.
Relevant Questions and Answers
1. What are the major risks associated with investing in Wolverine World Wide?
– The primary risks include the company’s lack of profitability, historical volatility in earnings, and the potential for future declines in dividend growth if earnings do not rebound as forecasted.
2. How does Wolverine’s dividend compare to its competitors?
– Wolverine’s 1.9% yield matches the industry average, but investors should compare its dividend growth, payout ratio, and earnings stability with those of peer companies to determine its relative attractiveness.
3. What should investors keep an eye on moving forward?
– Investors should monitor quarterly earnings reports, updates on cash flow generation, and any changes in analyst forecasts to gauge whether Wolverine is likely to recover or face further difficulties.
Market Insights
Recent trends indicate Wolverine must adapt to maintain competitive advantage amid market shifts. The footwear and apparel industry is tackling innovations in sustainability and consumer preferences. Companies introducing eco-friendly products and enhancing direct-to-consumer sales channels are more likely to capture market share.
For more information, visit Wolverine World Wide.
