Why We're Cautious About Quad/Graphics' (NYSE:QUAD) Upcoming Dividend

Alright, fellow investors, let's talk about Quad/Graphics (NYSE:QUAD) and its upcoming dividend. Now, don't get me wrong, dividends are like the cherry on top of the sundae – they're sweet, they're satisfying, and they make the whole thing look even more appealing. But before we dive in and start licking that cherry, let's take a step back and consider a few things.

First off, Quad/Graphics has been on a bit of a rollercoaster ride lately. In 2024, the company reported a net loss of $51 million, which was actually an improvement from the previous year. But let's not forget that this was still a loss, and it's not exactly the kind of news that makes investors jump for joy. Now, Quad/Graphics has been working on reducing its debt, and it's made some progress there, but it's still got a ways to go.

Now, let's talk about that dividend. Quad/Graphics did increase its quarterly dividend by 50% in 2024, which is great and all, but we need to consider the context. The company's net sales decreased by 9.7% compared to 2023, and while it did manage to increase its adjusted EBITDA margin by 48 basis points, it's still a bit of a mixed bag.



Here's the thing: Quad/Graphics is trying to diversify its revenue streams, and that's a good thing. But it's also trying to grow its net sales, and that's a bit more challenging. The company estimates that it will achieve net sales growth between 2027 and 2028, but that's still a few years away. In the meantime, we're left with a company that's trying to grow its dividend while its sales are still in decline.

Now, I'm not saying that Quad/Graphics' upcoming dividend is a bad thing. Dividends are great, and if the company can sustain and grow its dividend payments, that's a good thing. But we need to be cautious and consider the context. Quad/Graphics is still working on reducing its debt, and it's still trying to grow its sales. Until we see some more consistent growth in those areas, we might want to approach Quad/Graphics' dividend with a bit of caution.

In conclusion, while Quad/Graphics' upcoming dividend is certainly enticing, we need to be mindful of the company's recent financial performance and its ongoing efforts to reduce debt and grow sales. As always, do your own research and consider your own risk tolerance before making any investment decisions. Happy investing!