Last update on 2024-06-27

Corning (GLW) - Dividend Analysis (Final Score: 5/8)

In-depth dividend analysis of Corning (GLW), scoring 5 out of 8 on key criteria reveals performance stability over 20 years with strong historical payout.

Short Analysis - Dividend Score: 5

We're running Corning (GLW) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

Summary: Corning, Inc. (GLW) was evaluated against an 8-criteria scoring system aimed at assessing its dividend policy's performance and stability, achieving a score of 5. Analysis revealed that Corning's dividend yield of 3.6782% surpasses the industry average of 0.77%, with consistent yearly payments strengthening its appeal to income-seeking investors. The average 20-year dividend growth rate is 13.75%, indicating strong returns, albeit with some inconsistencies. The payout ratio stands at a low 29.38%, generally suggesting sustainable dividends. Examinations showed that earnings adequately cover dividends, although certain years had weaker coverage. Free cash flow analysis presented fluctuating yet recently robust coverage of dividends, emphasizing stability. The company has displayed stable dividends over the past 15 years, though it had non-payment periods before 2009, highlighting financial challenges in earlier years. Furthermore, Corning's stock repurchases over the years showcase efforts to enhance shareholder value.

Insights for Value Investors Seeking Stable Income

Recommendation: Based on the analysis, Corning demonstrates a strong and improving commitment to dividend stability and growth, along with strategic share buybacks, signaling solid value for shareholders. Potential investors should consider the historical non-payment periods and coverage inconsistencies but view recent trends positively. It appears worthwhile for income-focused investors to explore this stock further, given Corning's attractive yield and stable payouts in recent years.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. It is an important indicator for investors seeking regular income and for evaluating the company's financial health and appeal as an investment.

Corning's dividend yield of 3.6782% significantly exceeds the industry average of 0.77%. Over the last 20 years, Corning's dividend yield has generally trended upward, peaking in recent years. For instance, from 2003 to 2007, the yield was negligible or non-existent, whereas it has consistently remained above 2% since 2013, except for a dip in 2014 and 2017. Such an increase indicates that Corning has been increasingly committed to returning value to its shareholders. The strong yield, relative to both the broader industry and Corning's historical performance, reflects positively on its dividend policy and attractiveness to income-focused investors. Moreover, consistent annual dividend payments, reaching $1.12 per share in 2023 from just $0.1 in 2007, further underscore this trend. Overall, this trend is favorable for investors seeking dividend income.

Average annual Growth Rate higher than 5% in the last 20 years?

Criterion 1.1 examines whether the dividend growth rate of Corning (GLW) is higher than 5% over the last 20 years. A dividend growth rate exceeding 5% suggests the company is effectively increasing shareholder value over time. It's a crucial indicator for investors seeking reliable income sources and potential capital appreciation.

The dividend ratios for Corning (GLW) over the last 20 years show significant fluctuations. For instance, the ratio peaked at 100% in 2008 and then dropped to 0% in some subsequent years. The average dividend ratio over this period is approximately 13.75%, which is substantially higher than the 5% threshold. This demonstrates that, on average, Corning has increased its dividend payout at a significant rate. However, the inconsistency and spikes in some years should be taken into account, as they may indicate volatility in dividend payments. Nonetheless, considering the average growth rate, this trend can be seen as positive and conducive to long-term investor confidence.

Average annual Payout Ratio lower than 65% in the last 20 years?

Explain the criterion for Corning (GLW) and why it is important to consider

The average payout ratio for Corning over the last 20 years is 29.38%, which is significantly lower than the 65% threshold. This trend is generally considered positive from a dividend sustainability perspective. A lower payout ratio typically indicates that the company is retaining a larger portion of its earnings to reinvest in growth opportunities or to cushion against future financial uncertainties. However, there were some exceptions, notably in 2020 and 2023, where the payout ratio spiked to 130.80% and 163.48%, respectively. This could be indicative of extraordinary circumstances impacting Corning's earnings or dividend policy for those years.

Dividends Well Covered by Earnings?

Why it is important to ensure that dividends are well covered by earnings, specifically in the context of Corning (GLW)?

When assessing whether Corning's dividends are well covered by earnings, we look at the historical Earnings per Share (EPS) and Dividend per Share (DPS) trends. A key observation is the ratio of EPS to DPS, which indicates coverage. A higher ratio represents better coverage. Examining figures from 2003 to 2023, an inadequate coverage is observed whenever the percentage is below 1. For instance, in 2023, a ratio of around 1.63 is highly favorable, suggesting strong earning capacity. However, particularly concerning years like 2009 (0.15) and 2016 (0.17) suggest alarmingly low coverage, raising sustainability concerns. Consistent favorable coverage observed from 2018 indicates an improving trend, crucial for investor confidence.

Dividends Well Covered by Cash Flow?

Evaluating whether dividends are well covered by cash flow entails looking at the company's free cash flow relative to its dividend payout. This metric is crucial because it reveals whether the company generates sufficient cash to cover its dividend distributions, indicating financial stability and sustainability in its dividend policy.

Corning's historical free cash flow and dividend payout indicate varied coverage over the years. For example, in 2003, the free cash flow was negative ($233 million) against a payout of only $19 million, resulting in a poor coverage ratio (-0.081). However, significant improvements followed, with notable years like 2018 displaying a ratio of 1.12 and 2021 achieving 0.921, suggesting better coverage. In exceptionally strong years like 2019, where free cash flow spiked to $803 million against dividends of $74.2 million, the coverage ratio hit an impressive 16.86, underlining exceptional financial health. Most recently, the 2023 coverage ratio of 1.6 suggests a robust ability to cover dividends with cash flow. In summary, while fluctuations are present, the trend indicates a generally positive ability of Corning to cover its dividends from free cash flow, particularly in recent years, reinforcing stability and reliability in its dividend payouts.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Corning (GLW) and why it is important to consider

Stable dividend payments over a period of 20 years is a critical indicator for income-seeking investors. A stable or increasing dividend suggests that the company has robust cash flows and a consistent earnings stream, which adds a layer of financial security for investors relying on dividend income. Corning (GLW)'s dividend per share over the past 20 years has displayed growth, moving from $0 in 2003 to $1.12 in 2023. The trend is reflective of the company's improving financial health and commitment to returning value to shareholders. The stability, barring any significant drop rates beyond the speculated <20%, is an excellent sign for prospective and current investors.

Dividends Paid for Over 25 Years?

Why the dividend payment history over 25 years is critical for evaluating a company's dividend reliability and sustainability.

Analyzing Corning's (GLW) dividend payment history over the past 25 years indicates some periods of non-payment. Dividends were consistently paid in recent 15 years with significant increases, reflecting a steady financial improvement since the early 2000s. However, the absence of dividends from 2002 to 2009 could be seen as a red flag that potential investors should heed. Stability in approaching payouts only became notable post-2010, showing strong improvements thereafter.

Reliable Stock Repurchases Over the Past 20 Years?

Reliable Stock Repurchases Over the Past 20 Years

The number of shares of Corning (GLW) fluctuated significantly over the past 20 years, with notable reductions especially between 2014 and 2020. For example, shares dropped from around 1.42 billion in 2014 to about 761 million in 2020. Such significant buybacks can be a good sign as they often indicate that the company believes its shares are undervalued. The reliable repurchase years indicate periods where the company consistently bought back shares, which is generally favorable for shareholders since it can enhance earnings per share (EPS). The overall trend suggests a commitment to delivering value to shareholders, given the reported average repurchase rate of -1.5602, indicating a consistent reduction in the number of shares. This could generally be considered good, showing the company’s focus on improving shareholder value through stock repurchases.