Kennedy-Wilson Holdings (NYSE:KW) Has Announced A Dividend Of $0.12
Kennedy-Wilson Holdings (NYSE:KW) has announced a dividend of $0.12 per share, payable on October 9, yielding 5.4%. Despite a 37% stock price increase over the last three months, concerns arise as the company is unprofitable and paying out 469% of its free cash flow, raising doubts about the sustainability of the dividend. Earnings per share are forecasted to decline by 10.1% next year, and the company has a history of dividend cuts. Overall, the dividend's future appears uncertain, prompting caution among income investors.
The board of Kennedy-Wilson Holdings, Inc. (NYSE:KW) has announced that it will pay a dividend on the 9th of October, with investors receiving $0.12 per share. Based on this payment, the dividend yield on the company's stock will be 5.4%, which is an attractive boost to shareholder returns.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Investors will be pleased to see that Kennedy-Wilson Holdings' stock price has increased by 37% in the last 3 months, which is good for shareholders and can also explain a decrease in the dividend yield.
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Kennedy-Wilson Holdings Might Find It Hard To Continue The Dividend
A big dividend yield for a few years doesn't mean much if it can't be sustained. Kennedy-Wilson Holdings is unprofitable despite paying a dividend, and it is paying out 469% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.
Looking forward, earnings per share is forecast to fall by 10.1% over the next year. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.
Check out our latest analysis for Kennedy-Wilson Holdings
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was $0.36 in 2015, and the most recent fiscal year payment was $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.
Dividend Growth Potential Is Shaky
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Kennedy-Wilson Holdings' earnings per share has shrunk at 58% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.
We're Not Big Fans Of Kennedy-Wilson Holdings' Dividend
In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Overall, this doesn't get us very excited from an income standpoint.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 2 warning signs for Kennedy-Wilson Holdings that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
