Archer-Daniels-Midland (ADM) has announced that its stock will go ex-dividend in four days, with shareholders acquiring stocks on or after November 14th being ineligible for the December 6th dividend. The dividend has been set at $0.45 per share, contributing to last year's total dividends of $1.80 per share. The company's trailing yield currently stands at 2.5%, calculated from the current stock price of $72.03.
Despite the company's rapid earnings growth, with an annual rate of 21% over the past five years, and an average annual dividend increase of approximately 9.0% over the last decade, concerns have been raised about ADM's ability to sustain its dividend payments. Last year, the company paid out 24% of its profit as dividends, but it exceeded its free cash flow by 197%. This high cash flow payout ratio could pose a risk to maintaining its current dividend.
The company's decision to reward shareholders with regular dividends is evident, but the sustainability of these payments is under scrutiny due to the high cash flow payout ratio. Despite this potential risk, ADM has demonstrated a consistent commitment to its shareholders through steady dividend increases over the past decade.
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