Yes, this is a random WestRock (WRK) dividend stock, come back story. Why is it a comeback? WestRock decimated their dividend during the height of the pandemic from COVID-19. One of the world’s biggest, packaging companies reduced their dividend to $0.20 per share, per quarter from the high of $0.465.
WesetRock reduced their dividend 2.5 years ago. Therefore, 2.5 years have gone by and they just recorded record revenue for their 4th quarter sale. Now that it appears they’ve been cruising along during this potential recession, how does this stock look, now? Is WestRock saying, “Don’t call it a comeback!”
Westrock – the set back
Given the mass amount of packaging material that was used during the pandemic (think – take out, grocery products/items, pizza – of course), it came as a shock when WestRock reduced their dividend. The cut it by MORE than half, going from $0.465 to $0.20 per hare, per quarter. A 57% cut is fairly steep if you ask me.
The investing community at the time didn’t think they needed to do it, either. They used the reason to pay down debt, which is great long-term and I am completely okay with. WestRock wanted to be flexible and fluid during a turbulent time period. WestRock did satisfy their goal, going from well over $9 billion in long-term debt to now, at the time of this writing, $7.5 billion in long-term debt.
After the news, this sent the stock tumbling way down to the $23-$24 range.
As you can see, the stock is up 50% truly since the pandemic and is down approximately 14%-15% this year. However, that is just noise. WestRock (WRK) may, JUST MAY be setting themselves up for a brilliant comeback, as performance appears to be firing away, record revenue, increasing profits and… dividend payouts baby!
westrock’s come back performance
Not only are they making a resurgence of their dividend, their performance has been nothing short but stellar.
On their latest earnings release –> See here , WestRock recorded over $5.4 billion of revenue, up from $5.1 billion the same period last year. Net income was also up over $20 million.
On top of that, they’ve been buying back a ton of outstanding shares. WestRock went from 269 million shares from September last year, down to 256 million shares. The massive packaging company bought back almost 5% of their shares over a 12 month period.
Therefore, and partly because of that, earnings per share for WestRock blossomed up to $1.34 from $1.20. I don’t care what anyone says, net income going up 11% for a company in the packaging business is phenomenal! That’s a helluva lot of pizza, I know I’ve been a contributor to that!
Okay, now let’s dive in to what you are here for – the dividend stock metrics through – the Dividend Diplomat Stock Screener baby!
Westrock dividend stock metrics
WestRock you are going through the Dividend Diplomat Stock Screener! Here, we focus on 3 main dividend stock metrics:
1.) Price to Earnings Ratio (P/E): We look for the price to earnings ratio < the S&P 500 and the competition.
2.) Dividend Payout Ratio: The preferred dividend payout ratio is < 60%. In fact, we believe the perfect payout ratio is between 40% and 60%.
3.) Dividend Growth Rate: Given we are dividend investing on our way to financial freedom, as we believe dividend income is the best source of passive income, we look at the 5 year dividend growth rate. In addition, we review how many years the company has increased their dividend.
1.) P/E Ratio: At an earnings expectation of $4.32, with a recent share price of $37.66, the price to earnings ratio is only 8.72. This is far lower than the S&P 500 P/E ratio of over 20x. A decent sign of undervaluation still in this volatile stock market.
2.) Dividend Payout Ratio: Paying a quarterly dividend of $0.275 or $1.10 per year, the dividend payout ratio is only 25.46%. Therefore, a low and extremely safe dividend. Furthermore, the dividend should be increased no doubt going forward.
3.) Dividend Growth Rate: Now, WestRock cut their dividend down in Q2 of 2020. However, they have gone from $0.20 per share, per quarter, all the way to $0.275. They have increased this dividend 3x since the dividend reduction. Therefore, they have increased, technically, in 2021 and 2022, so going on 2 years and 2023 will mark the 3rd consecutive year. They are summarizing dividend growth, which is a good sign.
Finally, we’ll take a look at the dividend yield. As an investor, you want to know how much owning this dividend stock pays you now! The yield for WRK is 2.92%. Not the highest yielding dividend stock, given the current market, but a fairly decent kickback to shareholders.
is Westrock Stock a Stock to buy now?
Now that we’ve gone through the metrics, WRK is a stock to buy for dividend stock portfolio?
Although they really are making a dividend stock comeback, I already own 135 shares or $5,000+ worth and invested in this stock. However, for those looking to diversify their investment or dividend stock portfolio, WestRock is offering a decent value proposition, but wish the yield was above the 3% threshold, as that’s how much you can receive from an online savings account.
If you head over two our YouTube channelyou’ll find other undervalued dividend growth stocks that are higher on my list for stocks to buy now!
How about you? Do you own WestRock stock? Are you finding it hard to find an undervalued stock, as the stock market has been showing green? Share your comments and feedback below!
As always, thanks for stopping by, good luck and happy investing!