High Dividend 50: Kronos Worldwide

PUBLISHED Jan 12, 2023, 4:04:04 PM        SHARE

img
imgSure Dividend Blog

Few companies in the specialty chemicals industry have a history of paying consistent dividends over a long period of time.

Kronos Worldwide is one of the most loyal dividend payers in the specialty chemicals industry, even though this is a tricky industry to navigate.

The company is currently trading with a tremendous 8.0% yield attached, meaning it is one of the high-yield stocks in our database.

We have created a spreadsheet of stocks (and closely related REITs and MLPs, etc.) with dividend yields of 5% or more.

You can download your free full list of all securities with 5%+ yields (along with important financial metrics such as dividend yield and payout ratio) by clicking on the link below:

Click here to instantly download your free high dividend stocks spreadsheet now, along with important investing metrics.

In this article, we will analyze the prospects of Kronos Worldwide.

Business Overview

Kronos Worldwide is a company that specializes in the production of titanium dioxide pigments, which are primarily used to enhance the color and brightness of products like paint, cosmetics, and plastics.

It’s quite important to outline the company’s ownership structure:

  • Kronos Worldwide went public in 2003 and is a subsidiary of Valhi Inc. (NYSE: VHI), which owns 50% of the company’s outstanding stock.

  • Further, a subsidiary of NL Industries, Inc. (NYSE: NL) holds about 30% of the stock.

  • Then, Valhi holds about 83% of NL’s outstanding common stock, and a wholly-owned subsidiary of Contran Corporation holds approximately 92% of Valhi’s outstanding common stock.

  • Finally, a majority of Contran’s outstanding voting stock is controlled directly by Lisa K. Simmons and various family trusts that exist for the benefit of Ms. Simmons.

Thus, shares have a limited trading volume, while the benefits of common shareholders may not be prioritized, which is something that prospective investors should be cautious about.

Overall, Kronos’ results have been volatile but generally favorable. While this is a pure commodity business, Kronos historically has been a strong operator with disciplined cost controls.

Still, the company’s cyclical business model can easily lead to unfavorable trading periods, as was the case in its most recent Q3 results.

Kronos recorded net revenues of $460 million, down 8% from the same period in 2021.

The company’s earnings-per-share also fell to 18 cents, down significantly from 31 cents during the prior-year period.

Management raised prices to reflect inflationary pressures, but these price increases were more than offset by a 20% decline in TiO2 sales volumes.

Volatile electricity prices and a weak global economic outlook have cast a long shadow over industrial operations in Kronos’s market. Thus, investors should anticipate a rough 2023 for the company before it potentially gets back on track.

Growth Prospects

Kronos operates in a very cyclical industry, with its results being highly susceptible to the underlying movement of titanium dioxide prices.

Thus, Kronos has had a fluctuating performance in terms of its earnings-per-share over the years. It has posted periods of earning as much as $2 per share but also experienced losses.

KRO Diluted Net Income

The company has not made any significant investments or acquisitions that would change its long-term earnings potential.

It also has not done any major repurchases of shares either, which has prevented the potential for growth in earnings-per-share through that strategy.

Overall, we expect Kronos, on average, to post similar earning results as in previous years moving forward.

Competitive Advantages

Kronos estimates it is the largest producer of TiO2 in Europe, with about 46% of sales volumes attributable to markets in Europe.

This means that the company has a significant advantage over smaller competitors when it comes to managing its TiO2 supply and being more efficient.

The company also has minimal net debt, which stands close to $70 million. Thus, the ongoing rise in interest rates should not be a big threat to the company.

Dividend Analysis

Kronos has a multi-layered ownership structure, where it is owned by other subsidiary companies, and its main purpose is to distribute profits to the higher levels of ownership, with the ultimate beneficiary being a trust controlled by Ms. Simmons.

This gives increased confidence that the dividend will remain a priority of the Board of Directors, as has been the case during the company’s history.

Kronos did suspend the dividend during the Great Financial Crisis, but it was quickly reinstated in 2010. By 2011, the dividend had already greatly exceeded its pre-2007 levels, while it has either been maintained or increased since.

KRO dividend per share

Due to its clean balance sheet and relatively strong performance throughout the industry’s cycle, we believe that Kronos’ dividend will be sustained moving forward and could even grow slowly over time.

Nevertheless, as hinted at via its 8% dividend yield, the dividend is not immune to a potential recession or a rough industry cycle, which could lead to temporary suspension or a cut.

Final Thoughts

Kronos is a rather interesting company. Due to its multi-layered ownership structure, the company is designed to distribute the majority of its earnings, which has resulted in a consistent stream of hefty payouts over the years.

Despite the cyclical nature of its business model, Kronos has been prudently managed, has little debt on its balance sheet, and has achieved overall decent results even during downturns in its industry.

While a temporary dividend cut is not unlikely if its niche market remains underwater for too long, it’s quite likely that Kronos will continue to provide shareholders with sizable dividends moving forward.

Originally Posted on suredividend.com

KRO, Buy

Kronos Worldwide...
Return: -3.88%

KRO, Buy

Return: -3.88%


Sound investments
don't happen alone

Find your crew, build teams, compete in VS MODE, and identify investment trends in our evergrowing investment ecosystem. You aren't on an island anymore, and our community is here to help you make informed decisions in a complex world.

More Reads
High Dividend 50: New York Community Bancorp
Image

New York Community Bancorp (NYCB) is currently offering a very attractive dividend yield of 7.4% while it is also trading at a low forward price-to-earnings ratio of 7.4.

High Dividend 50: Antero Midstream Corp.
Image

Antero Midstream (AM) is currently offering a very attractive dividend yield of 8.1% while it is also trading at a forward price-to-distributable cash flow ratio of 7.3.

High Dividend 50: LyondellBasell Industries
Image

LyondellBasell Industries (LYB) is a U.S.-based chemicals and refining company that offers a high dividend yield of more than 5% at current prices.

AEP is a Great Buy to Rebuild Your Portfolio
Image

AEP has a proven track record of strong growth, disciplined capital expenditure, and reliable earnings guidance.

A Review of the Vanguard utility index and clean energy fund
Image

A Vanguard stock fund is a type of mutual fund or ETF that invests in stocks, also known as equities. These funds are designed to provide investors with exposure to the stock market and the potential for capital appreciation.

National Grid - NGG Stock Forecast, Price & News
Image

NG has been building its reputation as an investment-grade company with stable revenue growth over the past few years. The key reasons to invest in NG may be its fundamental strengths, including a sound balance sheet, steady earnings growth, and modest payout ratios.

The Top Value Investments
Image

These are the top value stock ideas picked by the top investors on the platform.

The Top Financial News and Analysis
Image

The top articles and commentary on recent and relevant financial, economic, and business news.

The Top Macroeconomic News and Analysis
Image

The articles and commentary on world macroeconomics that are relevant now

The Top Stocks Analyzed Using the Stock Selection Guide (SSG)
Image

These top stocks were analyzed using the stock selection guide and picked by the top investors on the platform.

Is Entergy Corp a Buy?
Image

Entergy is trading at a significantly lower valuation than its competitors. As a result, the company is currently undervalued, and better to buy it. Read more.

Is Exelon a Buy?
Image

Exelon Corp. ( EXC ) is getting a lot of attention these days, with analysts and investors trying to figure out if the company is worthy. Read more!

Is Constellation Energy a Buy?
Image

Constellation Energy is not recommended as a buy based on its current price, its negative margins, and its aging fleet of nuclear power plants.

Dividend Income Summary: Lanny’s November 2022 Summary
Image

This is what dividend investing is all about! Investing in dividend stocks allows YOU to earn dividend income, the best passive income stream! Bias, you better believe it.

Dividend Kings In Focus: Northwest Natural Gas
Image

Utility stocks are often associated with long histories of paying dividends to shareholders. Their relatively predictable earnings and recession resistance combine to make increasing dividends somewhat easier over the long term than a business that is highly cyclical.

3 Recession Proof Stocks with Low Volatility
Image

3 Recession Proof Stocks with Low Volatility. The world is experiencing a wide range of macro troubles right now.

Bert’s December Dividend Stock Watch List: 3 Stocks to Buy!
Image

The final month of the year is usually an insane month for the holidays. Family, food, football….its the best! Let’s make sure that December is also going to be an excellent month for dividend investing as well.

December 2022 Stock Considerations
Image

With a new trading month already in full swing it is time, once again, to highlight some of my potential stock purchases.

Which Utilities are Investing in Utility Scale Solar?
Image

We've researched the top public utilities in the U.S. to find the definitive leaders in solar power generation

Hershey (HSY): Dividend Stock Review
Image

Hershey (HSY): Dividend Stock Review. As a dividend growth Investor, the best companies to invest in are quality companies with a history of growing revenues and cash flow to enable them to increase their dividends over time.

Resources for Publishers
Resources for New Investors
Boosted with BossCoin
Financial Literacy Leaders
user_profile
Wise Intelligent
user_profile
Tom Hamilton
user_profile
Mark Robertson
user_profile
Kevin Matthews II
user_profile
Akeiva Ellis
user_profile
Brendan Dale
user_profile
Kenneth Chavis IV
user_profile
Sharita Humphrey