AZZ (NYSE:AZZ) Is Due To Pay A Dividend Of US$0.17

AZZ Inc. (NYSE:AZZ) has announced that it will pay a dividend of US$0.17 per share on the 2nd of August. This payment means that the dividend yield will be 1.7%, which is around the industry average.

Check out our latest analysis for AZZ

AZZ's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, AZZ 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 0.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

AZZ Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was US$0.50 in 2012, and the most recent fiscal year payment was US$0.68. This means that it has been growing its distributions at 3.1% per annum over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

We Could See AZZ's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see AZZ has been growing its earnings per share at 7.6% a year over the past five years. AZZ definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

AZZ Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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 of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Are management backing themselves to deliver performance? Check their shareholdings in AZZ in our latest insider ownership analysis. 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.