Zimmer Biomet Holdings (NYSE:ZBH) Has Announced A Dividend Of $0.24
The board of Zimmer Biomet Holdings, Inc. (NYSE:ZBH) has announced that it will pay a dividend on the 30th of April, with investors receiving $0.24 per share. Including this payment, the dividend yield on the stock will be 0.8%, which is a modest boost for shareholders' returns.
Check out our latest analysis for Zimmer Biomet Holdings
Zimmer Biomet Holdings' Earnings Easily Cover The Distributions
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, Zimmer Biomet Holdings was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 34.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 15% by next year, which is in a pretty sustainable range.
Zimmer Biomet Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $0.80, compared to the most recent full-year payment of $0.96. This works out to be a compound annual growth rate (CAGR) of approximately 1.8% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Zimmer Biomet Holdings has grown earnings per share at 35% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like Zimmer Biomet Holdings' Dividend
Overall, we like to see the dividend staying consistent, and we think Zimmer Biomet Holdings might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Zimmer Biomet Holdings that you should be aware of before investing. Is Zimmer Biomet Holdings 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.
