York Water (NASDAQ:YORW) Is Increasing Its Dividend To $0.2108
The York Water Company's (NASDAQ:YORW) dividend will be increasing from last year's payment of the same period to $0.2108 on 16th of January. The payment will take the dividend yield to 2.2%, which is in line with the average for the industry.
View our latest analysis for York Water
York Water's Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, York Water's earnings easily covered the dividend, but free cash flows were negative. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
Looking forward, earnings per share is forecast to rise by 2.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 52% by next year, which is in a pretty sustainable range.
York Water Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.553 in 2013, and the most recent fiscal year payment was $0.843. This implies that the company grew its distributions at a yearly rate of about 4.3% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
We Could See York Water's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. York Water has seen EPS rising for the last five years, at 9.1% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.
Our Thoughts On York Water's Dividend
Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. While York Water is earning enough to cover the payments, the cash flows are lacking. We don't think York Water is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for York Water (of which 1 is significant!) you should know about. Is York Water not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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.
