York Water's (NASDAQ:YORW) Shareholders Will Receive A Bigger Dividend Than Last Year
The York Water Company (NASDAQ:YORW) has announced that it will be increasing its dividend from last year's comparable payment on the 14th of April to $0.2027. This takes the annual payment to 1.9% of the current stock price, which is about average for the industry.
View our latest analysis for York Water
York Water's Earnings Easily Cover The Distributions
Solid dividend yields are great, but they only really help us if the payment is sustainable. Based on the last payment, York Water's earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
The next year is set to see EPS grow by 7.1%. If the dividend continues on this path, the payout ratio could be 59% by next year, which we think can be pretty sustainable going forward.
York Water Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.534, compared to the most recent full-year payment of $0.811. This means that it has been growing its distributions at 4.3% per annum over that time. 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.
York Water Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. York Water has impressed us by growing EPS at 6.2% per year over the past five years. 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, we always like to see the dividend being raised, but we don't think York Water will make a great income stock. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, York Water has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
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