Stock Analysis

Dover (NYSE:DOV) Will Pay A Larger Dividend Than Last Year At US$0.50

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NYSE:DOV
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Dover Corporation's (NYSE:DOV) dividend will be increasing to US$0.50 on 15th of September. Based on the announced payment, the dividend yield for the company will be 1.2%, which is fairly typical for the industry.

See 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. However, prior to this announcement, Dover's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 12.6%. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

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NYSE:DOV Historic Dividend August 9th 2021

Dover Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2011, the first annual payment was US$1.10, compared to the most recent full-year payment of US$2.00. This means that it has been growing its distributions at 6.2% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see Dover has been growing its earnings per share at 12% a 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.

Dover 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. 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 2 warning signs for Dover that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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