Stock Analysis
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.
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.
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
Further research on
Dover
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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.
About NYSE:DOV
Dover
Dover Corporation provides equipment and components, consumable supplies, aftermarket parts, software and digital solutions, and support services worldwide.
Outstanding track record, good value and pays a dividend.
