Flowserve (NYSE:FLS) Will Pay A Dividend Of $0.21

The board of Flowserve Corporation (NYSE:FLS) has announced that it will pay a dividend on the 12th of July, with investors receiving $0.21 per share. This means that the annual payment will be 1.7% of the current stock price, which is in line with the average for the industry.

View our latest analysis for Flowserve

Flowserve's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, Flowserve's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 86.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.

Flowserve 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 2014, the annual payment back then was $0.56, compared to the most recent full-year payment of $0.84. This implies that the company grew its distributions at a yearly rate of about 4.1% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Flowserve Could Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Flowserve has grown earnings per share at 7.6% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

Flowserve Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Flowserve might even raise payments in the future. 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. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Flowserve that investors should take into consideration. Is Flowserve not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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