Valmont Industries (NYSE:VMI) Will Pay A Dividend Of $0.60

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Valmont Industries, Inc.'s (NYSE:VMI) investors are due to receive a payment of $0.60 per share on 15th of January. This means that the annual payment will be 0.8% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Valmont Industries

Valmont Industries' Payment Could Potentially Have Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Valmont Industries' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 38.3% over the next year. If the dividend continues on this path, the payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.

historic-dividend
NYSE:VMI Historic Dividend November 1st 2024

Valmont Industries Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $1.00 in 2014, and the most recent fiscal year payment was $2.40. This means that it has been growing its distributions at 9.1% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

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 Valmont Industries has grown earnings per share at 20% per year over the past five years. Valmont Industries definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Valmont Industries' Dividend

Overall, we like to see the dividend staying consistent, and we think Valmont Industries might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 2 warning signs for Valmont Industries 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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