Dow Inc. Cuts Quarterly Dividend By 50%
Dow Inc.’s (DOW) stock is down nearly 10% after the chemical producer announced that it is cutting its quarterly dividend payment to shareholders by 50%.
The new quarterly distribution will be $0.35 U.S. per share, down from $0.70 U.S. previously, the company announced.
In a news release, Dow Inc. said: “Today’s announcement aims to ensure we maximize long-term shareholder value as we navigate a prolonged industry downturn.”
Before the distribution cut, Dow Inc.’s stock boasted a dividend yield of 9.22%, one of the highest on Wall Street. Based on the new payout, the yield will fall to around 5%.
The new dividend payments will cost the company about $1 billion U.S. per year.
Dow Inc. said that it is expected to generate free cash flow of $500 million U.S. this year and $600 million U.S. in 2026.
That’s a big decline from 2020 to 2023, when Dow Inc.’s free cash flow averaged more than $5 billion U.S. per year. Management said the dividend is being cut as they preserve cash.
The lowered dividend was announced alongside Dow Inc.’s second-quarter financial results.
The company known for making chemicals found in plastics, silicones, and polyurethanes reported an earnings per share loss of -$0.42 U.S. and sales of $10.1 billion U.S.
Wall Street had been looking for a loss of -$0.17 U.S. and sales of $10.2 billion U.S. A year ago, the company reported a profit of $0.68 U.S. from revenue of $10.9 billion U.S.
The company said its sales volumes decreased 1% with gains in the U.S. and Canada offset by weakness in Europe and the Middle East.
Dow’s operating profit in its packaging division was $71 million U.S. during Q2 of this year, down from $703 million U.S. a year ago.
At the same time, operating profit in the company’s chemical intermediates business was a loss of -$185 million U.S., down from a profit of $7 million U.S. a year ago.
Management said they are grappling with a global chemical market that is oversupplied, driving down profit margins and forcing them to control costs, including the dividend payout.
Before today (July 24), DOW stock had fallen 23% this year to trade at $30.37 U.S. per share.
