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SpartanNash (NASDAQ:SPTN) Is Increasing Its Dividend To US$0.21

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SpartanNash Company (NASDAQ:SPTN) has announced that it will be increasing its dividend on the 31st of March to US$0.21, which will be 5.0% higher than last year. This will take the annual payment from 2.6% to 2.7% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for SpartanNash

SpartanNash's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, SpartanNash's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 3.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 41%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

SpartanNash Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the dividend has gone from US$0.26 to US$0.80. This means that it has been growing its distributions at 12% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

We Could See SpartanNash's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that SpartanNash has grown earnings per share at 6.2% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for SpartanNash's prospects of growing its dividend payments in the future.

SpartanNash Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that SpartanNash 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 of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 2 warning signs for SpartanNash that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.