Springfield Properties' (LON:SPR) Dividend Will Be Increased To £0.02

Springfield Properties Plc (LON:SPR) will increase its dividend from last year's comparable payment on the 11th of December to £0.02. This takes the annual payment to 1.9% of the current stock price, which unfortunately is below what the industry is paying.

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Springfield Properties' Future Dividend Projections Appear Well Covered By Earnings

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, Springfield Properties 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.

Over the next year, EPS is forecast to fall by 4.3%. If the dividend continues along recent trends, we estimate the payout ratio could be 16%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

See our latest analysis for Springfield Properties

Springfield Properties' Dividend Has Lacked Consistency

Looking back, Springfield Properties' dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The last annual payment of £0.02 was flat on the annual payment from8 years ago. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

The Dividend Has Growth Potential

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Springfield Properties has impressed us by growing EPS at 8.4% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Springfield Properties' prospects of growing its dividend payments in the future.

Springfield Properties Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Springfield Properties is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Springfield Properties that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.