Clarkson (LON:CKN) Will Pay A Dividend Of £0.33

The board of Clarkson PLC (LON:CKN) has announced that it will pay a dividend of £0.33 per share on the 12th of September. This takes the annual payment to 3.0% of the current stock price, which unfortunately is below what the industry is paying.

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Clarkson's Payment Could Potentially Have Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Clarkson's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 9.0%. If the dividend continues on this path, the payout ratio could be 44% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Clarkson

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2015, the annual payment back then was £0.60, compared to the most recent full-year payment of £1.09. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Clarkson has grown earnings per share at 41% per year over the past five years. Clarkson is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Clarkson Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Clarkson that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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