Wynnstay Group (LON:WYN) Is Increasing Its Dividend To UK£0.05

Wynnstay Group Plc (LON:WYN) has announced that it will be increasing its dividend on the 29th of October to UK£0.05, which will be 8.7% higher than last year. This makes the dividend yield 2.8%, which is above the industry average.

See our latest analysis for Wynnstay Group

Wynnstay Group's Dividend Is Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Wynnstay Group's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 7.5% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 46% by next year, which is in a pretty sustainable range.

Wynnstay Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The first annual payment during the last 10 years was UK£0.071 in 2011, and the most recent fiscal year payment was UK£0.15. This works out to be a compound annual growth rate (CAGR) of approximately 7.8% 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.

Wynnstay Group May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, Wynnstay Group's EPS was effectively flat over the past five years, which could stop the company from paying more every year. The company has been growing at a pretty soft 0.1% per annum, and is paying out quite a lot of its earnings to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

We Really Like Wynnstay Group's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. You can also discover whether shareholders are aligned with insider interests by checking our visualisation of insider shareholdings and trades in Wynnstay Group stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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