Stock Analysis

Dover's (NYSE:DOV) Dividend Will Be US$0.50

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NYSE:DOV
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The board of Dover Corporation (NYSE:DOV) has announced that it will pay a dividend of US$0.50 per share on the 15th of June. This means the dividend yield will be fairly typical at 1.5%.

See our latest analysis for Dover

Dover's Earnings Easily Cover the Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Dover's earnings easily 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 fall by 0.6% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 27%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

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NYSE:DOV Historic Dividend May 26th 2022

Dover Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the first annual payment was US$1.26, compared to the most recent full-year payment of US$2.00. This implies that the company grew its distributions at a yearly rate of about 4.7% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Dover has impressed us by growing EPS at 16% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

We Really Like Dover's Dividend

Overall, we like to see the dividend staying consistent, and we think Dover might even raise payments in the future. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 3 warning signs for Dover that investors need to be conscious of moving forward. Is Dover not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

What are the risks and opportunities for Dover?

Dover Corporation provides equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services worldwide.

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Rewards

  • Trading at 15.9% below our estimate of its fair value

  • Earnings are forecast to grow 5.9% per year

  • Earnings grew by 23.5% over the past year

Risks

  • Has a high level of debt

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