Updated 3/5/25
Amcor plc (AMCR) is a global leader in packaging solutions, supplying essential materials to industries like food, beverage, healthcare, and personal care. With a market cap of around $14.4 billion, the company is a staple in the packaging sector, known for innovation and sustainability. For investors focused on dividends, Amcor’s appeal is clear—its yield is over 5%, making it an attractive choice for those seeking income.
But while the dividend looks generous on paper, its sustainability is another question. The company’s high payout ratio and significant debt load mean investors need to take a closer look at whether Amcor can keep delivering steady dividends in the years ahead. Let’s break it down.
📊 Key Dividend Metrics
📌 Dividend Yield: 5.12% 🔥 – Higher than market averages, great for income investors
📌 Forward Dividend Rate: $0.51 per share 💰 – Reliable cash flow potential
📌 Payout Ratio: 91.2% ⚠️ – Extremely high, raising sustainability concerns
📌 5-Year Average Yield: 4.44% 📈 – Currently paying above historical levels
📌 Dividend Growth: Modest but steady 🏗️ – No major hikes, but consistent payouts
📌 Ex-Dividend Date: February 26, 2025 ⏳ – Just passed, next opportunity in Q2
Dividend Overview
Amcor has long been a favorite among income investors, thanks to its steady quarterly payouts. At 5.12%, the current yield is significantly above its five-year average of 4.44%, which suggests the stock might be undervalued—or that the market sees some risks ahead.
The company has a scheduled dividend payment of $0.51 per share on March 18, 2025. While this is good news for investors looking for income, the payout ratio of 91.2% is pushing the limits. Companies that distribute nearly all their earnings as dividends leave little room for reinvestment or cushion against downturns.
A high yield can sometimes be a red flag. If earnings drop or the business faces unexpected challenges, Amcor might have to adjust its dividend.
Dividend Growth and Safety
Amcor has a solid track record of paying dividends, but growth has been moderate. This isn’t the type of stock that’s going to rapidly increase its payouts year after year. Investors looking for strong dividend hikes might be disappointed.
Is the Dividend Secure?
- The payout ratio is 91.2%, meaning nearly all earnings go to dividends. That’s a tight margin.
- Free cash flow is strong at $691.5 million, which helps cover payouts.
- Revenue has declined slightly, down 0.30% year-over-year—not a major issue yet, but worth monitoring.
- Debt levels are high, with a debt-to-equity ratio of 197.44%, meaning the company relies heavily on borrowing.
Amcor is covering its dividend for now, but any sustained drop in earnings could make future payouts more difficult. While the dividend is unlikely to be cut immediately, don’t expect significant increases in the near future.
Chart Analysis
The price action of Amcor (AMCR) over the past year shows a clear cyclical movement with defined uptrends and pullbacks. During the mid-year period, the stock experienced a strong rally, peaking above $11 before entering a steady decline. This correction was confirmed by the 50-day moving average (orange line) crossing below the 200-day moving average (blue line), a classic bearish signal.
Recently, the price has started to stabilize, attempting to reclaim the 200-day moving average. However, the 50-day moving average remains below it, indicating that the stock hasn’t fully shifted into a bullish trend yet. For now, the price is hovering around the $10 level, testing short-term resistance and support.
Volume has been elevated during significant price movements, particularly during the sharp drop in late November and the bounce in early February. This suggests active participation from traders and institutions. The Relative Strength Index (RSI) remains neutral, not showing overbought or oversold conditions.
The latest five candlesticks indicate mixed sentiment. There is a combination of long wicks and relatively small bodies, signaling indecision among investors. This suggests buyers and sellers are battling for control, and a clear trend direction has yet to emerge.
The key level to watch is whether the stock can sustain above the 200-day moving average. If it does, it may build momentum for a potential uptrend. However, if it fails to hold, another retest of recent lows could be on the horizon.
Analyst Ratings
Amcor plc (AMCR) has recently seen a mix of analyst upgrades and downgrades, reflecting differing views on its future potential. While some analysts are growing more optimistic about the stock’s prospects, others remain cautious due to concerns over growth and financial stability.
📈 Upgrades:
🔹 Macquarie upgraded Amcor from Neutral to Outperform on November 27, 2024. This change suggests a stronger confidence in the company’s ability to deliver returns, possibly due to improving market conditions or operational efficiencies.
🔹 Citigroup raised its rating on January 6, 2025, moving from Neutral to Buy and adjusting the price target from $11 to $12. The firm sees value in the stock at current levels, believing Amcor has upside potential driven by cost-cutting measures and stabilizing demand.
📉 Downgrades:
🔻 BofA Securities downgraded Amcor from Buy to Underperform on July 10, 2023, slashing the price target from $12.40 to $9. This shift reflects concerns about slowing revenue growth and pressure from rising input costs, which could impact profitability.
🔻 Another downgrade came as analysts expressed caution over Amcor’s high debt levels and potential margin compression. Some believe the stock could struggle to outperform its peers in the near term, especially if economic uncertainty persists.
Analyst sentiment remains divided, with some seeing Amcor as a value play while others worry about potential headwinds. The current consensus price target sits around $10.50 – $11, indicating moderate upside from current levels but also highlighting the mixed outlook on the stock’s future performance.
Earning Report Summary
Amcor recently shared its latest earnings report, giving investors a look at how the company is performing and where it’s headed. The numbers show a business that’s staying steady, even with some challenges in the market.
For the second quarter, Amcor brought in $3.24 billion in revenue, which was just slightly down (0.3%) from the same time last year. While that’s a small decline, the good news is that demand appears to be picking up, with volume growth improving for the fourth straight quarter. In fact, overall volumes were up 2.3%, a sign that more customers are buying Amcor’s packaging solutions.
Earnings per share came in at $0.16, which matched expectations. The company also saw a small boost in profitability, as its adjusted EBIT margin expanded to 11.2%, up 40 basis points from the previous year.
Looking at the bigger picture, Amcor’s first half of the year was solid. Total sales for the six-month period hit $6.59 billion, and both adjusted earnings before interest and taxes (EBIT) and earnings per share (EPS) grew 5%. That’s a healthy sign, especially considering the headwinds many companies are facing right now.
On the operations side, Amcor continues to prioritize safety, with a strong record of keeping workplace injuries to a minimum. A big focus for the company is its merger with Berry Global, which is expected to unlock about $650 million in synergies. Nearly 40% of those savings should kick in during the first year, which could improve margins and cash flow.
Speaking of cash flow, the company generated over $350 million in the quarter, allowing it to pay down $375 million in debt. That’s a smart move, giving Amcor more flexibility to invest in growth and return value to shareholders.
Looking ahead, Amcor is sticking with its full-year forecast, expecting low to mid-single-digit organic growth. The company remains focused on innovation and sustainability, key areas that should help it stay competitive in an evolving market.
Overall, Amcor’s latest results show a steady business making strategic moves to strengthen its position. While revenue growth isn’t surging, the company is improving efficiency, managing costs well, and positioning itself for long-term success.
Financial Health and Stability
Balance Sheet Strength
One of the biggest concerns with Amcor is its high debt load. The company carries $7.49 billion in total debt, and with a debt-to-equity ratio approaching 200%, it’s more leveraged than most of its peers. While packaging is a stable industry, a balance sheet this heavy with debt can create challenges, especially in a rising interest rate environment.
On the positive side, Amcor generates strong cash flow, with $1.25 billion in operating cash flow over the past year. This helps offset some of the debt risks, but it doesn’t erase them entirely.
The company’s current ratio of 1.26 suggests it can meet short-term obligations, but it isn’t sitting on a ton of liquidity. While Amcor is financially stable for now, it doesn’t have a huge margin for error.
Valuation and Stock Performance
Is Amcor Stock Fairly Priced?
📌 Price-to-Earnings (P/E): 18.08 (trailing), 11.60 (forward) – Future earnings expectations suggest it’s reasonably valued
📌 Price-to-Sales (P/S): 1.06 – Trading at a fair multiple of revenue
📌 Price-to-Book (P/B): 3.80 – Slightly high, but within industry norms
📌 Enterprise Value/EBITDA: 11.14 – Suggests it’s neither too cheap nor too expensive
Stock Performance
- 52-Week High: $11.48
- 52-Week Low: $8.80
- Current Price: $10.07
- Beta (5-Year Monthly): 0.81 (Lower volatility than the broader market)
Amcor’s stock price is hovering around the middle of its 52-week range, meaning the market isn’t particularly bullish or bearish. It has underperformed the S&P 500, which is up 13.19% over the past year, but that’s expected for a defensive dividend stock.
From a valuation perspective, Amcor isn’t overpriced, but it’s also not a screaming bargain. If the company can improve revenue growth and reduce its debt burden, there could be more upside.
Risks and Considerations
Even though Amcor offers an attractive dividend, there are a few risks to keep in mind.
1. High Payout Ratio
At 91.2%, the company is paying out nearly all its earnings. This leaves little room for reinvestment or future growth. If earnings slip, the dividend could be at risk.
2. Declining Revenue
While the revenue decline of 0.30% year-over-year isn’t alarming, it’s not an ideal trend. If sales continue to stagnate, it could impact earnings and, eventually, dividends.
3. High Debt Levels
A debt-to-equity ratio of nearly 200% is a concern. The company relies heavily on borrowed money, which can become problematic in a higher interest rate environment.
4. Limited Dividend Growth
Amcor’s dividend growth has been relatively modest. It provides stable income, but it’s not a stock that’s going to dramatically increase payouts over time.
5. Industry Headwinds
The packaging industry faces increasing environmental regulations and fluctuating material costs. These factors could pressure margins and profitability in the future.
Final Thoughts
Amcor is a high-yield dividend stock that can provide steady income for investors looking for passive cash flow. With a yield above 5%, it’s appealing to those focused on generating income from their portfolio. However, the high payout ratio and significant debt levels make it a stock that requires careful monitoring.
The dividend appears safe for now, but don’t expect rapid increases in the coming years. The company will need to improve revenue growth and reduce its debt to maintain long-term dividend stability.
For investors comfortable with some risk, Amcor could be a solid addition to a diversified dividend portfolio. However, if dividend safety is the top priority, it may be worth watching how the company manages its financial health before making a decision.
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