There's a similar situation brewing in shares of Harsco (HSC - Get Report), a $1.68 billion industrial services firm. Harsco's businesses include servicing metals and minerals miners, maintaining railroads, and engineering scaffolding. While that diversification is a plus for shareholders, it didn't really help to lessen the blow that the whole industrial segment took during the Great Recession.
But in spite of sales and earnings numbers that are still well short of the numbers that the company booked back in 2008, the firm has been steadily increasing its dividend payout. As a result, the firm has paid out $1.74 more per share in dividends over the last 12 months than it's actually earned, a pattern that's only sustainable for so long.Even though Harsco has decent balance sheet liquidity, it also carries far more debt. Just like Windstream, something has to give eventually. Either Harsco drops its dividend, or it goes looking for capital in another, more painful, way. Currently, Harsco pays out 20.5 cents per share. That's nearly a 4% yield at current price levels.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts