Allegion's (NYSE:ALLE) Dividend Will Be Increased To $0.51

Allegion plc (NYSE:ALLE) will increase its dividend on the 31st of March to $0.51, which is 6.3% higher than last year's payment from the same period of $0.48. The payment will take the dividend yield to 1.5%, which is in line with the average for the industry.

View our latest analysis for Allegion

Allegion's Projected Earnings Seem Likely To Cover Future Distributions

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, Allegion was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 38.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.

Allegion Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.32 in 2015, and the most recent fiscal year payment was $1.92. This implies that the company grew its distributions at a yearly rate of about 20% over that duration. 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.

Allegion Could Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. Allegion has impressed us by growing EPS at 6.4% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Allegion Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Allegion is a strong income stock thanks to its track record and growing earnings. 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.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Allegion that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.