Yahoo Finance Williams Companies' (NYSE:WMB) Upcoming Dividend Will Be Larger Than Last Year's
The board of The Williams Companies, Inc. (NYSE:WMB) has announced that it will be increasing its dividend by 5.3% on the 27th of March to $0.4475, up from last year's comparable payment of $0.425. The payment will take the dividend yield to 5.3%, which is in line with the average for the industry.
See our latest analysis for Williams Companies
Williams Companies' Earnings Easily Cover The Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, Williams Companies' profits didn't cover the dividend, but the company was generating enough cash instead. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.
Earnings per share is forecast to rise by 25.7% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 82% which is a bit high but can definitely be sustainable.
Williams Companies Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $1.20 in 2013 to the most recent total annual payment of $1.70. This works out to be a compound annual growth rate (CAGR) of approximately 3.5% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
Williams Companies' Dividend Might Lack Growth
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Williams Companies has grown earnings per share at 23% per year over the past five years. EPS has been growing well, but Williams Companies has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think Williams Companies' payments are rock solid. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. This company is not in the top tier of income providing stocks.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 3 warning signs for Williams Companies (1 doesn't sit too well with us!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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