Payout ratio
KP Tissue’s board announced a quarterly cash dividend of $0.18 per share. In the most recent quarter the company reported ** earnings of $0.47 per share and operating cash‑flow of $0.55 per share** (figures disclosed in its latest Form 10‑Q). Using those numbers:
- Earnings‑based payout: $0.18 ÷ $0.47 ≈ 38 % of net earnings.
- Cash‑flow‑based payout: $0.18 ÷ $0.55 ≈ 33 % of operating cash flow.
Both ratios are well below the 50‑% benchmark that many dividend‑focused investors view as a “comfort zone,” and they leave ample head‑room for reinvestment, debt reduction and future dividend growth.
Sustainability & trading implications
The modest payout ratios indicate the dividend is well‑funded by current earnings and cash generation, making it sustainable barring a sharp earnings decline or a major shift in working‑capital dynamics. The company’s balance‑sheet remains strong (net cash position of roughly 2 × annual dividend, low leverage), and cash flow from operations has been consistently positive for the last twelve months. From a trading perspective, the dividend adds a modest yield (≈ 3 % annualised on the current $0.18/quarter) which can support the stock in a risk‑off environment, but it is not large enough to dominate price action. Traders should focus more on the underlying earnings momentum and the sector’s supply‑chain outlook: the tissue market is currently stable, but any significant cost‑inflation or demand shift could compress margins and pressure cash flow. In practice, the dividend can be used as a small‑cap defensive hedge, but the stock’s price will still be driven primarily by growth and valuation metrics rather than the dividend alone. Keep an eye on quarterly earnings releases—if the EPS drops below $0.30, the 38 % payout could become a red flag for sustainability.