Empire (TSE:EMP.A) Has Announced That It Will Be Increasing Its Dividend To CA$0.22

Empire Company Limited's (TSE:EMP.A) dividend will be increasing from last year's payment of the same period to CA$0.22 on 31st of July. This makes the dividend yield 1.6%, which is above the industry average.

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Empire's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Empire's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS could expand by 6.9% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

See our latest analysis for Empire

Empire Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the annual payment back then was CA$0.36, compared to the most recent full-year payment of CA$0.88. This implies that the company grew its distributions at a yearly rate of about 9.3% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

We Could See Empire's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Empire has impressed us by growing EPS at 6.9% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Empire's prospects of growing its dividend payments in the future.

We Really Like Empire's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 6 Empire analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Empire 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.