Spirax-Sarco Engineering (LON:SPX) Has Announced That It Will Be Increasing Its Dividend To UK£0.97
Spirax-Sarco Engineering plc's (LON:SPX) dividend will be increasing to UK£0.97 on 20th of May. Although the dividend is now higher, the yield is only 1.1%, which is below the industry average.
View our latest analysis for Spirax-Sarco Engineering
Spirax-Sarco Engineering's Payment Has Solid Earnings Coverage
If it is predictable over a long period, even low dividend yields can be attractive. The last dividend was quite easily covered by Spirax-Sarco Engineering's earnings. This means that a large portion of its earnings are being retained to grow the business.
Over the next year, EPS is forecast to expand by 3.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 46% by next year, which is in a pretty sustainable range.
Spirax-Sarco Engineering Has A Solid Track Record
The company has an extended history of paying stable dividends. The first annual payment during the last 10 years was UK£0.53 in 2012, and the most recent fiscal year payment was UK£1.36. 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.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Spirax-Sarco Engineering has impressed us by growing EPS at 14% per year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
Spirax-Sarco Engineering Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Spirax-Sarco Engineering that you should be aware of before investing. Is Spirax-Sarco Engineering 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.
