DENTSPLY SIRONA (NASDAQ:XRAY) Has Announced That It Will Be Increasing Its Dividend To $0.16
DENTSPLY SIRONA Inc. (NASDAQ:XRAY) has announced that it will be increasing its dividend from last year's comparable payment on the 12th of April to $0.16. The payment will take the dividend yield to 2.0%, which is in line with the average for the industry.
View our latest analysis for DENTSPLY SIRONA
DENTSPLY SIRONA Is Paying Out More Than It Is Earning
Solid dividend yields are great, but they only really help us if the payment is sustainable. While DENTSPLY SIRONA is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.
The next 12 months is set to see EPS grow by 177.5%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 126%, which probably can't continue without putting some pressure on the balance sheet.
DENTSPLY SIRONA Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was $0.25, compared to the most recent full-year payment of $0.64. This works out to be a compound annual growth rate (CAGR) of approximately 9.9% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.
Dividend Growth Potential Is Shaky
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. DENTSPLY SIRONA's earnings per share has shrunk at 11% a year over the past five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
Our Thoughts On DENTSPLY SIRONA's Dividend
Overall, we always like to see the dividend being raised, but we don't think DENTSPLY SIRONA will make a great income stock. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We don't think DENTSPLY SIRONA is a great stock to add to your portfolio if income is your focus.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for DENTSPLY SIRONA that you should be aware of before investing. Is DENTSPLY SIRONA not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
