Dewhurst Group Plc's (LON:DWHT) investors are due to receive a payment of £0.05 per share on 13th of August. Despite this raise, the dividend yield of 1.3% is only a modest boost to shareholder returns.
See our latest analysis for Dewhurst Group
Dewhurst Group's 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. However, Dewhurst Group's earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS could expand by 9.0% if recent trends continue. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.
Dewhurst Group Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of £0.08 in 2014 to the most recent total annual payment of £0.158. This implies that the company grew its distributions at a yearly rate of about 7.0% over that duration. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
We Could See Dewhurst Group's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Dewhurst Group has seen EPS rising for the last five years, at 9.0% per annum. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Dewhurst Group's Dividend
Overall, a dividend increase is always good, and we think that Dewhurst Group is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
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. Taking the debate a bit further, we've identified 1 warning sign for Dewhurst Group that investors need to be conscious of moving forward. Is Dewhurst Group 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.
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About AIM:DWHT
Dewhurst Group
Manufactures and sells electrical components and control equipment for industrial and commercial capital goods in the United Kingdom, Europe, the Americas, Asia, Australia, and internationally.
Flawless balance sheet average dividend payer.
