EMIS Group (LON:EMIS) Is Increasing Its Dividend To UK£0.18

EMIS Group plc (LON:EMIS) will increase its dividend on the 17th of May to UK£0.18. This will take the dividend yield from 2.6% to 2.6%, providing a nice boost to shareholder returns.

View our latest analysis for EMIS Group

EMIS Group's Dividend Is Well Covered By Earnings

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before this announcement, EMIS Group was paying out 76% of earnings, but a comparatively small 61% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 12.6% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 73%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

EMIS Group Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The first annual payment during the last 10 years was UK£0.11 in 2012, and the most recent fiscal year payment was UK£0.35. This means that it has been growing its distributions at 12% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Has Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. EMIS Group has impressed us by growing EPS at 8.7% per year over the past five years. The payout ratio is very much on the higher end, which could mean that the growth rate will slow down in the future, and that could flow through to the dividend as well.

Our Thoughts On EMIS Group's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. With a reasonable track record and good earnings coverage, the payments look sustainable. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 4 analysts we track are forecasting for EMIS Group for free with public analyst estimates for the company. Is EMIS Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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