E I Du Pont De Nemours And Co (DD) vs. United Technologies Corporation (UTX): Which Dow Stock’s Dividend Dominates?

Round three: power
It’s not that hard to commit to paying back shareholders, but are these payments enticing or merely token? Let’s take a look at how both companies have maintained their dividend yields over time as their businesses and share prices have grown:

DD Dividend Yield data by YCharts.

Round four: strength
A stock’s yield can stay high without much effort if its share price doesn’t budge, so let’s take a look at the growth in payouts over the past five years. If you bought in several years ago and the company has grown its payout substantially, your real yield is likely much better than what’s shown above:

DD Dividend data by YCharts.

Round five: flexibility
A company needs to manage its cash wisely to ensure that there’s enough available for tough times. Paying out too much of free cash flow in dividends could be a warning sign that the dividend is at risk, particularly if business weakens. This next metric analyzes just how much of their free cash flows our two companies have paid out in dividends:

DD Cash Div. Payout Ratio TTM data by YCharts.

It came down to the wire, as we might have expected. Somewhat surprisingly, the defense contractor pulled ahead at the last minute with a more sustainable free-cash-flow payout ratio, which has never been higher than E I Du Pont De Nemours And Co (NYSE:DD)’s levels over the past five years. Do you agree with this assessment, or would you still prefer DuPont in your portfolio?

The article DuPont vs. United Technologies: Which Dow Stock’s Dividend Dominates? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.