Whirlpool (NYSE:WHR) Has Announced A Dividend Of $1.75

The board of Whirlpool Corporation (NYSE:WHR) has announced that it will pay a dividend of $1.75 per share on the 15th of June. Based on this payment, the dividend yield on the company's stock will be 8.9%, which is an attractive boost to shareholder returns.

While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Whirlpool's stock price has reduced by 39% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.

Our free stock report includes 2 warning signs investors should be aware of before investing in Whirlpool. Read for free now.

Whirlpool's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate Whirlpool's Could Struggle to Maintain Dividend Payments In The Future

Whirlpool's Future Dividends May Potentially Be At Risk

If the payments aren't sustainable, a high yield for a few years won't matter that much. Whirlpool isn't generating any profits, and it is paying out a very high proportion of the cash it is earning. This makes us feel that the dividend will be hard to maintain.

The next 12 months is set to see EPS grow by 190.0%. If the dividend continues on its recent course, the payout ratio in 12 months could be 145%, which is a bit high and could start applying pressure to the balance sheet.

See our latest analysis for Whirlpool

Whirlpool Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $3.00 in 2015, and the most recent fiscal year payment was $7.00. This works out to be a compound annual growth rate (CAGR) of approximately 8.8% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 34% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

Whirlpool's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Whirlpool's payments, as there could be some issues with sustaining them into the future. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 2 warning signs for Whirlpool that investors should know about before committing capital to this stock. Is Whirlpool not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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