Carrier Global (NYSE:CARR) Is Paying Out A Larger Dividend Than Last Year

Carrier Global Corporation's (NYSE:CARR) dividend will be increasing from last year's payment of the same period to $0.185 on 10th of August. The payment will take the dividend yield to 1.6%, which is in line with the average for the industry.

Check out our latest analysis for Carrier Global

Carrier Global's Earnings Easily Cover The Distributions

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Carrier Global was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 5.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 22%, which is in the range that makes us comfortable with the sustainability of the dividend.

Carrier Global Doesn't Have A Long Payment History

The dividend hasn't seen any major cuts in the past, but the company has only been paying a dividend for 3 years, which isn't that long in the grand scheme of things. The annual payment during the last 3 years was $0.32 in 2020, and the most recent fiscal year payment was $0.74. This works out to be a compound annual growth rate (CAGR) of approximately 32% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Carrier Global has been growing its earnings per share at 13% a year over the past three years. With a decent amount of growth and a low payout ratio, we think this bodes well for Carrier Global's prospects of growing its dividend payments in the future.

We Really Like Carrier Global's Dividend

Overall, a dividend increase is always good, and we think that Carrier Global is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for Carrier Global that you should be aware of before investing. Is Carrier Global not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.