Cranswick (LON:CWK) Is Increasing Its Dividend To UK£0.51

The board of Cranswick plc (LON:CWK) has announced that it will be increasing its dividend on the 3rd of September to UK£0.51. This makes the dividend yield about the same as the industry average at 1.7%.

View our latest analysis for Cranswick

Cranswick's Dividend Is Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. However, prior to this announcement, Cranswick's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 10.7% over the next year. If the dividend continues on this path, the payout ratio could be 39% by next year, which we think can be pretty sustainable going forward.

Cranswick Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from UK£0.25 in 2011 to the most recent annual payment of UK£0.70. This means that it has been growing its distributions at 11% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Cranswick has seen EPS rising for the last five years, at 12% per annum. Cranswick definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Cranswick Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Cranswick that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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