Ardagh Metal Packaging S.A. (NYSE:AMBP) has announced that it will pay a dividend of $0.10 per share on the 26th of June. The dividend yield will be 10.0% based on this payment which is still above the industry average.

View our latest analysis for Ardagh Metal Packaging

Ardagh Metal Packaging's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The company is paying out a large amount of its cash flows, even though it isn't generating any profit. This is quite a strong warning sign that the dividend may not be sustainable.

Looking forward, earnings per share is forecast to rise exponentially over the next year. If the dividend extends its recent trend, estimates say the dividend could reach 49%, which we would be comfortable to see continuing.

Ardagh Metal Packaging Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 2 years, which isn't that long in the grand scheme of things. There hasn't been much of a change in the dividend over the last 2 years. Ardagh Metal Packaging hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Ardagh Metal Packaging Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that Ardagh Metal Packaging has grown earnings per share at 6.1% per year over the past five years. Unprofitable companies aren't normally our pick for a dividend stock, but we like the growth that we have been seeing. All is not lost, but the future of the dividend definitely rests upon the company's ability to become profitable soon.

Ardagh Metal Packaging's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Ardagh Metal Packaging's payments, as there could be some issues with sustaining them into the future. The payments are bit high to be considered sustainable, and the track record isn't the best. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Ardagh Metal Packaging that you should be aware of before investing. Is Ardagh Metal Packaging not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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