Park Aerospace (NYSE:PKE) Has Announced A Dividend Of $0.125
The board of Park Aerospace Corp. (NYSE:PKE) has announced that it will pay a dividend on the 2nd of May, with investors receiving $0.125 per share. The dividend yield will be 3.8% based on this payment which is still above the industry average.
Check out our latest analysis for Park Aerospace
Park Aerospace's Projections Indicate Future Payments May Be Unsustainable
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 138% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.
Looking forward, EPS could fall by 3.9% if the company can't turn things around from the last few years. If the dividend continues along recent trends, we estimate the payout ratio could reach 144%, which could put the dividend in jeopardy if the company's earnings don't improve.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of $2.90 in 2015 to the most recent total annual payment of $0.50. Dividend payments have fallen sharply, down 83% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.
The Dividend's Growth Prospects Are Limited
Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Over the past five years, it looks as though Park Aerospace's EPS has declined at around 3.9% a year. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.
Park Aerospace's Dividend Doesn't Look Great
Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. The dividend doesn't inspire confidence that it will provide solid income in the future.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Park Aerospace (of which 2 shouldn't be ignored!) you should know about. Is Park Aerospace not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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