LCI Industries' (NYSE:LCII) Shareholders Will Receive A Bigger Dividend Than Last Year

By
Simply Wall St
Published
May 23, 2021
NYSE:LCII
Source: Shutterstock

LCI Industries (NYSE:LCII) has announced that it will be increasing its dividend on the 18th of June to US$0.90. This will take the annual payment from 2.1% to 2.2% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for LCI Industries

LCI Industries' Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, LCI Industries was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 31.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 36%, which is in the range that makes us comfortable with the sustainability of the dividend.

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NYSE:LCII Historic Dividend May 24th 2021

LCI Industries Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2014, the first annual payment was US$2.00, compared to the most recent full-year payment of US$3.00. This works out to be a compound annual growth rate (CAGR) of approximately 6.0% a year over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider LCI Industries to be a consistent dividend paying stock.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. LCI Industries has seen EPS rising for the last five years, at 17% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for LCI Industries' prospects of growing its dividend payments in the future.

LCI Industries 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.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 3 warning signs for LCI Industries that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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