Whirlpool Corporation (NYSE: WHR) has passed our checks and is about to pay a dividend of US $ 1.40

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Some investors rely on dividends to grow their wealth, and if you’re one of those dividend sleuths, you might be intrigued to know that Whirlpool Company (NYSE: WHR) is set to be ex-dividend in just three days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for the payment of a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. This means that you will need to buy Whirlpool shares by August 26 to receive the dividend, which will be paid on September 15.

The company’s next dividend payment will be US $ 1.40 per share. Last year, in total, the company distributed US $ 5.60 to shareholders. Looking at the last 12 months of distributions, Whirlpool has a rolling return of about 2.5% on its current price of $ 221.2. Dividends are a major contributor to returns on investment for long-term holders, but only if the dividend continues to be paid. That is why we should always check whether dividend payments seem sustainable and whether the business is growing.

See our latest review for Whirlpool

If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Whirlpool has a low and conservative payout ratio of just 17% of its after-tax income. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by the cash flow. The good news is that she has only paid out 13% of her free cash flow in the past year.

It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.

Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.

NYSE: WHR Historical Dividend August 22, 2021

Have profits and dividends increased?

Companies with consistently rising earnings per share usually make the best dividend-paying stocks because they generally find it easier to raise dividends per share. If business goes into recession and the dividend is reduced, the company could experience a sharp drop in value. That’s why it’s heartwarming that Whirlpool’s revenues have skyrocketed, rising 25% per year for the past five years. Whirlpool earnings per share sprinted like the Road Runner on a track day; barely stopping even for a cheeky “beep”. We also like him to reinvest most of his profits back into his business. ‘

Most investors primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Whirlpool has generated dividend growth of 13% per year on average over the past 10 years. Both earnings per share and dividends have been rising rapidly lately, which is great to see.

To summarize

From a dividend perspective, should investors buy or avoid Whirlpool? Whirlpool has grown its profits at a rapid rate and has a cautiously low payout ratio, which implies that it is reinvesting heavily in its business; a sterling combination. Whirlpool looks solid on this analysis overall, and we would definitely consider taking a closer look.

So while Whirlpool looks good from a dividend standpoint, it’s still worth being aware of the risks involved in this title. Be aware that Whirlpool displays 3 warning signs in our investment analysis, and 1 of them cannot be ignored …

If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in the mentioned stocks.
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