Willis Towers Watson (NASDAQ:WTW) Has Announced That It Will Be Increasing Its Dividend To $0.88
Willis Towers Watson Public Limited Company (NASDAQ:WTW) has announced that it will be increasing its periodic dividend on the 15th of April to $0.88, which will be 4.8% higher than last year's comparable payment amount of $0.84. This takes the annual payment to 1.2% of the current stock price, which unfortunately is below what the industry is paying.
View our latest analysis for Willis Towers Watson
Willis Towers Watson's Dividend Is Well Covered By Earnings
It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Before making this announcement, Willis Towers Watson was easily earning enough to cover the dividend. 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 60.5% over the next year. If the dividend continues on this path, the payout ratio could be 21% by next year, which we think can be pretty sustainable going forward.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2014, the annual payment back then was $2.97, compared to the most recent full-year payment of $3.36. This means that it has been growing its distributions at 1.3% per annum over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.
The Dividend Looks Likely To Grow
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Willis Towers Watson has seen EPS rising for the last five years, at 14% per annum. Willis Towers Watson definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Willis Towers Watson Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Willis Towers Watson is a strong income stock thanks to its track record and growing earnings. 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. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Willis Towers Watson that investors need to be conscious of moving forward. Is Willis Towers Watson 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.
