Genuine Parts' (NYSE:GPC) Dividend Will Be Increased To $1.00
Genuine Parts Company's (NYSE:GPC) dividend will be increasing from last year's payment of the same period to $1.00 on 1st of April. This will take the dividend yield to an attractive 2.8%, providing a nice boost to shareholder returns.
See our latest analysis for Genuine Parts
Genuine Parts' Dividend Is Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Genuine Parts' earnings. This means that a large portion of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 18.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 36%, which is in the range that makes us comfortable with the sustainability of the dividend.
Genuine Parts Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $2.15 in 2014 to the most recent total annual payment of $4.00. This means that it has been growing its distributions at 6.4% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Genuine Parts has been growing its earnings per share at 13% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.
Genuine Parts Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Genuine Parts is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. For example, we've picked out 1 warning sign for Genuine Parts that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
