Granite Construction (NYSE:GVA) Is Paying Out A Dividend Of $0.13

The board of Granite Construction Incorporated (NYSE:GVA) has announced that it will pay a dividend on the 15th of July, with investors receiving $0.13 per share. The dividend yield will be 0.8% based on this payment which is still above the industry average.

View our latest analysis for Granite Construction

Granite Construction's Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Granite Construction was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise exponentially over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 11%, so there isn't too much pressure on the dividend.

Granite Construction Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. There hasn't been much of a change in the dividend over the last 10 years. 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. Granite Construction has impressed us by growing EPS at 49% per year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Granite Construction could prove to be a strong dividend payer.

We Really Like Granite Construction's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Granite Construction that investors need to be conscious of moving forward. Is Granite Construction not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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