Our analysis is based on comparing Orion Engineered Carbons SA with the following peers – Methanex Corporation, Calgon Carbon Corporation, Balchem Corporation and Canexus Corporation (MEOH-US, CCC-US, BCPC-US and CXUSF-US).
Orion Engineered Carbons SA’s dividend yield is 3.46 percent and its dividend payout is 145.26 percent. This compares to a peer median dividend yield of 1.26 percent and a payout level of 19.47 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s relatively low dividend quality score of 33 out of a possible score of 100 raises questions on the sustainability of its robust payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to September 30, 2016), OEC-US paid a low quality dividend, which represents a yield of 3.51% at the current price.
- Dividend quality trend has not been consistent over the last five years. Dividends were paid during 2 of these years — of these 1 was medium quality and 1 was low quality.
- The ending cash balance, with a dividend coverage of 1.66x, provides a moderate cushion in case of a significant reduction of cash flows in the future.
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Over the last twelve months (prior to September 30, 2016), OEC-US paid a low quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.28x), investing cash flow (coverage of -2.05x), issuance cash flow (coverage of -2.30x) and twelve-month prior cash (coverage of 2.69x), for a total dividend coverage of 2.66x.
OEC-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -2.42x) and net share buybacks (coverage of -0.09x). Thus, the total coverage including share buybacks is 2.74x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.
|Dividend Yield (%)||N/A||N/A||N/A||5.24||5.9||3.46|
|Dividend Payout (%)||N/A||N/A||N/A||-56.37||94.06||145.26|
A complete list of metrics and analysis is available on the company page.
Orion Engineered Carbons SA supplies carbon black. Its carbon black is used as a performance additive in coatings, polymers, printing and special applications, and in the reinforcement of rubber in tires and mechanical rubber goods. The company’s Gas Blacks, Furnace Blacks and Specialty Carbon Blacks tint, colorize and enhance the performance of plastics, paints and coatings, inks and toners, adhesives and sealants, tires, and manufactured rubber goods, such as automotive belts and hoses. It operates through two reportable segments: Rubber Carbon Black and Specialty Carbon Black. Orion Engineered Carbons was founded on April 13, 2011 and is headquartered in Luxembourg.
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