|USD per share|
Reynolds American paid a total dividend of 2,629 million USD last year, for a market capitalization of 87,984 millions. Dividend per share of Reynolds American is 1.84 USD, and his stock market price 61.57 USD.
According to the chart below, where dividend yield is displayed, Reynolds American has a dividend yield of 2.99%, which is higher than the amount offered by both the market average and companies from USA. It is also bigger than average of Consumer Goods industry. This high dividend yield might be a sign to worry about the future of the company so deeper analysis is needed.
About the ability of Reynolds American to maintain his current dividend of USD 1.84 per share, an amount that accounts for 2.99%, we should study its payout ratio both on earnings and on cash-flows (see chart below). Reynolds American payout on ernings is currently 42.99%, which is higher than the market average, and companies of Consumer Goods industry, which are 40.24% and 37.51% respectively. Both figures show that Reynolds American can have problems to keep with his present dividend yield.
The payout on earnings should be complemented with the payout on cash flow since it is this latter amount the one which can be distributed to shareholders. Cash flow per share of Reynolds American is USD 0.90 per share, which is lower than the dividend per share paid by the company of USD 1.84, so the company does not generate enough cash to maintain his dividend in the future.
The following figure shows payout ratios over earnings and cashflow of Reynolds American, compared againt world market average, USA companies, Consumer Goods industry and Tobacco sector companies. You might also need to check full financial report of Reynolds American.
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