ONEOK , Inc. (NYSE: NYSE:OKE) and Ford Motor Company (NYSE: NYSE:F) are approaching their respective ex-dividend dates this coming Tuesday, October 31st, with dividend payments due on November 14th and December 1st respectively.
ONEOK, a prominent player in the natural gas industry, is set to pay a dividend of US$0.95 per share, adding to a trailing yield of 5.8% based on the current stock price of $66.27. This follows a total distribution of US$3.82 per share last year. With a payout ratio of 70%, ONEOK disburses a significant portion of its earnings and free cash flow, hinting at dividend sustainability unless there's a severe drop in earnings. The firm has demonstrated robust earnings growth at an annual rate of 26% over the past five years, striking a balance between growth reinvestment and shareholder dividends. Additionally, it has showcased an average annual dividend growth of 10% over the past decade.
On the other hand, Ford Motor Company is gearing up for its ex-dividend date with an upcoming dividend payment of US$0.15 per share. This adds to a trailing yield of roughly 5.2% based on its current stock price of $11.54 and follows a total dividend distributed of US$0.60 in the past year. The company's dividends, typically paid from profits, had a payout ratio exceeding half (58%) of its earnings last year.
However, concerns arise from Ford's financial health, particularly the high free cash flow payout which stood at 94% last year - a figure considered high for most businesses. Despite profits surpassing dividends paid out, the auto manufacturer did not generate enough cash to cover the dividend, leading to potential risks to dividend maintenance.
These concerns are further amplified by Ford's five-year earnings decline, with earnings per share falling approximately 12% a year over the past five years. Despite these challenges, Ford has demonstrated consistent dividend growth over the past decade, increasing its dividend by approximately 4.1% per year on average. Yet, the combination of shrinking earnings per share and high free cash flow payout raises questions about dividend sustainability, potentially making Ford Motor less attractive to dividend-focused investors.
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