nVent Electric (NYSE:NVT) Has Affirmed Its Dividend Of $0.175
The board of nVent Electric plc (NYSE:NVT) has announced that it will pay a dividend of $0.175 per share on the 4th of August. This means the dividend yield will be fairly typical at 1.7%.
See our latest analysis for nVent Electric
nVent Electric's Payment Has Solid Earnings Coverage
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, nVent Electric was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 4.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 28%, which is in the range that makes us comfortable with the sustainability of the dividend.
nVent Electric Is Still Building Its Track Record
nVent Electric's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The last annual payment of $0.70 was flat on the annual payment from5 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.
nVent Electric Could Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. nVent Electric has seen EPS rising for the last five years, at 5.1% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for nVent Electric's prospects of growing its dividend payments in the future.
In Summary
Overall, a consistent dividend is a good thing, and we think that nVent Electric has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 5 nVent Electric analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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