Cranswick (LON:CWK) Will Pay A Larger Dividend Than Last Year At £0.588

Cranswick plc (LON:CWK) will increase its dividend from last year's comparable payment on the 1st of September to £0.588. This takes the annual payment to 2.4% of the current stock price, which is about average for the industry.

Check out our latest analysis for Cranswick

Cranswick's Dividend Is Well Covered By Earnings

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Cranswick was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 2.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 41% by next year, which is in a pretty sustainable range.

Cranswick Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was £0.285 in 2013, and the most recent fiscal year payment was £0.794. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year 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.

We Could See Cranswick's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Cranswick has been growing its earnings per share at 8.5% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Cranswick's prospects of growing its dividend payments in the future.

We Really Like Cranswick's Dividend

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. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Earnings growth generally bodes well for the future value of company dividend payments. See if the 9 Cranswick analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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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