Weir Group's (LON:WEIR) Dividend Will Be £0.196

The Weir Group PLC (LON:WEIR) will pay a dividend of £0.196 on the 4th of November. Although the dividend is now higher, the yield is only 1.6%, which is below the industry average.

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Weir Group's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Weir 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.

The next year is set to see EPS grow by 27.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.

See our latest analysis for Weir Group

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was £0.44 in 2015, and the most recent fiscal year payment was £0.40. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. We are encouraged to see that Weir Group has grown earnings per share at 20% per year over the past five years. Weir Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Weir Group Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Weir Group is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. As an example, we've identified 1 warning sign for Weir Group that you should be aware of before investing. Is Weir Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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