Dewhurst Group's (LON:DWHT) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of Dewhurst Group Plc (LON:DWHT) has announced that the dividend on 15th of August will be increased to £0.0475, which will be 5.6% higher than last year's payment of £0.045 which covered the same period. This takes the annual payment to 1.4% of the current stock price, which unfortunately is below what the industry is paying.

Check out our latest analysis for Dewhurst Group

Dewhurst Group's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Dewhurst Group's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 5.1% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dewhurst Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of £0.0702 in 2013 to the most recent total annual payment of £0.148. This works out to be a compound annual growth rate (CAGR) of approximately 7.7% a year over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dewhurst Group Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Dewhurst Group has been growing its earnings per share at 5.1% a year over the past five years. Dewhurst Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Dewhurst Group Looks Like A Great Dividend Stock

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. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

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. For example, we've picked out 2 warning signs for Dewhurst Group that investors should know about before committing capital to this stock. 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.