Owens Corning (NYSE:OC) Is Increasing Its Dividend To $0.79

Owens Corning's (NYSE:OC) dividend will be increasing from last year's payment of the same period to $0.79 on 21st of January. This will take the dividend yield to an attractive 2.8%, providing a nice boost to shareholder returns.

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Owens Corning's Future Dividend Projections Seem Positive

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Even though Owens Corning isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Over the next year, EPS is forecast to expand rapidly. Assuming the dividend continues along the path it has been on, the payout ratio could get to 86% which is certainly still sustainable.

View our latest analysis for Owens Corning

Owens Corning Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was $0.68, compared to the most recent full-year payment of $3.16. This works out to be a compound annual growth rate (CAGR) of approximately 17% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

Owens Corning Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Owens Corning has seen EPS rising for the last five years, at 8.9% per annum. Even though the company isn't making a profit, strong earnings growth could turn that around in the near future. As long as the company becomes profitable soon, it is on a trajectory that could see it being a solid dividend payer.

In Summary

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. We don't think Owens Corning is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Owens Corning that you should be aware of before investing. Is Owens Corning not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.