U.S. markets closed
  • S&P 500

    4,577.11
    -85.74 (-1.84%)
     
  • Dow 30

    35,368.47
    -543.34 (-1.51%)
     
  • Nasdaq

    14,506.90
    -386.86 (-2.60%)
     
  • Russell 2000

    2,096.23
    -66.23 (-3.06%)
     
  • Crude Oil

    86.84
    +1.41 (+1.65%)
     
  • Gold

    1,814.30
    +1.90 (+0.10%)
     
  • Silver

    23.52
    +0.03 (+0.12%)
     
  • EUR/USD

    1.1331
    -0.0079 (-0.69%)
     
  • 10-Yr Bond

    1.8650
    +0.0930 (+5.25%)
     
  • GBP/USD

    1.3600
    -0.0047 (-0.34%)
     
  • USD/JPY

    114.5790
    -0.0010 (-0.00%)
     
  • BTC-USD

    42,488.19
    +314.70 (+0.75%)
     
  • CMC Crypto 200

    1,009.15
    -0.24 (-0.02%)
     
  • FTSE 100

    7,563.55
    -47.68 (-0.63%)
     
  • Nikkei 225

    28,257.25
    -76.27 (-0.27%)
     

Xerox Holdings (NASDAQ:XRX) Has Affirmed Its Dividend Of US$0.25

  • Oops!
    Something went wrong.
    Please try again later.
·3 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

The board of Xerox Holdings Corporation (NASDAQ:XRX) has announced that it will pay a dividend on the 31st of January, with investors receiving US$0.25 per share. The dividend yield will be 5.0% based on this payment which is still above the industry average.

See our latest analysis for Xerox Holdings

Xerox Holdings' Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Xerox Holdings was quite comfortably earning enough to cover the dividend. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 17.8% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 52%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

Xerox Holdings Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$0.68 in 2011, and the most recent fiscal year payment was US$1.00. This implies that the company grew its distributions at a yearly rate of about 3.9% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth Potential Is Shaky

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 17% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On Xerox Holdings' Dividend

Overall, a consistent dividend is a good thing, and we think that Xerox Holdings has the ability to continue this into the future. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Without at least some growth in earnings per share over time, the dividend will eventually come under pressure either from competition or inflation. See if the 6 analysts are forecasting a turnaround in our free collection of analyst estimates here. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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.

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