Dover (NYSE:DOV) Is Increasing Its Dividend To $0.51

Dover Corporation (NYSE:DOV) has announced that it will be increasing its periodic dividend on the 15th of September to $0.51, which will be 1.0% higher than last year's comparable payment amount of $0.505. This makes the dividend yield about the same as the industry average at 1.4%.

Check out our latest analysis for Dover

Dover's Dividend Is Well Covered By Earnings

Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Dover was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 42.7%. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.

Dover Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2013, the annual payment back then was $1.40, compared to the most recent full-year payment of $2.02. This works out to be a compound annual growth rate (CAGR) of approximately 3.7% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

We Could See Dover's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Dover has seen EPS rising for the last five years, at 9.2% per annum. Dover definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Dover Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for Dover that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.