Corning's Dividend: A Double-Edged Sword
Sunday, Feb 16, 2025 7:54 am ET
3min read Corning Incorporated (NYSE: GLW) has announced a quarterly dividend of $0.28 per share, payable on March 28, 2025, to shareholders of record on February 28, 2025. While this news may seem like a cause for celebration, it's essential to examine the underlying factors that could impact the sustainability of the dividend and the company's future prospects.
Firstly, let's consider Corning's dividend payout ratio. As of February 16, 2025, the company was paying out 189% of its earnings as dividends. This high payout ratio indicates that Corning is distributing a significant portion of its earnings to shareholders, which may not be sustainable in the long term if earnings do not increase significantly. Additionally, Corning's earnings per share have been shrinking at a rate of 12% per year over the past five years, which further raises concerns about the sustainability of the dividend.
GLW Basic EPS year-on-year growth value
| Name |
|---|
| Date |
| Basic EPS year-on-year growth value |
| Payout Ratio% |
| CorningGLW |
| 20241231 |
| 0.41 |
| -- |
On the other hand, Corning has a history of paying stable dividends, with an average dividend yield of 2.91% over the last five years. The annual payment has grown from $0.40 in 2015 to $1.12 in the most recent fiscal year, representing an 11% annual growth rate. This history of dividend growth is an attractive feature for income-focused investors.
However, investors should be cautious about relying on the dividend for income, as the company's earnings growth and payout ratio will play a significant role in the sustainability of the dividend. Corning's earnings growth is primarily driven by its ability to innovate and commercialize new products, as well as its cost-reduction initiatives and measures to improve pricing. If these factors do not contribute to significant earnings growth, the company may struggle to maintain its dividend payout.
In conclusion, Corning's dividend announcement is a double-edged sword. While the company has a history of paying stable dividends and offers an attractive yield, the high payout ratio and declining earnings per share raise concerns about the sustainability of the dividend. Investors should monitor Corning's earnings growth and payout ratio closely and consider the company's ability to maintain or increase its dividend payments in the future.
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