Hamilton Beach Brands Holding's (NYSE:HBB) Dividend Will Be US$0.10

The board of Hamilton Beach Brands Holding Company (NYSE:HBB) has announced that it will pay a dividend on the 15th of September, with investors receiving US$0.10 per share. This makes the dividend yield 2.3%, which will augment investor returns quite nicely.

View our latest analysis for Hamilton Beach Brands Holding

Hamilton Beach Brands Holding's Earnings Easily Cover the Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Hamilton Beach Brands Holding's earnings easily covered the dividend, but free cash flows were negative. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Looking forward, earnings per share could rise by 0.5% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Hamilton Beach Brands Holding Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from US$0.34 in 2017 to the most recent annual payment of US$0.40. This means that it has been growing its distributions at 4.1% per annum over that time. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Although it's important to note that Hamilton Beach Brands Holding's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. While growth may be thin on the ground, Hamilton Beach Brands Holding could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On Hamilton Beach Brands Holding's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Hamilton Beach Brands Holding is earning enough to cover the payments, the cash flows are lacking. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 5 warning signs for Hamilton Beach Brands Holding (3 are a bit concerning!) that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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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