Wentworth Resources' (LON:WEN) Dividend Will Be Increased To UK£0.012

Wentworth Resources plc (LON:WEN) will increase its dividend on the 29th of July to UK£0.012, which is 16% higher than last year. This will take the annual payment from 7.1% to 7.1% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for Wentworth Resources

Wentworth Resources' Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Wentworth Resources' earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to fall by 8.2% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 62%, which is comfortable for the company to continue in the future.

Wentworth Resources Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from US$0.01 in 2019 to the most recent annual payment of US$0.022. This means that it has been growing its distributions at 28% per annum over that time. Wentworth Resources has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Wentworth Resources has impressed us by growing EPS at 24% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Wentworth Resources could prove to be a strong dividend payer.

We Really Like Wentworth Resources' Dividend

Overall, a dividend increase is always good, and we think that Wentworth Resources 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. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 2 warning signs for Wentworth Resources that investors should take into consideration. 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.