RELX's (LON:REL) Upcoming Dividend Will Be Larger Than Last Year's
The board of RELX PLC (LON:REL) has announced that it will be paying its dividend of £0.418 on the 13th of June, an increased payment from last year's comparable dividend. This makes the dividend yield about the same as the industry average at 1.7%.
View our latest analysis for RELX
RELX's Payment Has Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, RELX's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, earnings per share is forecast to rise by 39.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 48%, which is in the range that makes us comfortable with the sustainability of the dividend.
RELX Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was £0.23, compared to the most recent full-year payment of £0.588. This means that it has been growing its distributions at 9.8% 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 Has Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. RELX has seen EPS rising for the last five years, at 5.7% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
We Really Like RELX's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for RELX that you should be aware of before investing. Is RELX 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.
