Hillenbrand (NYSE:HI) Has Announced That It Will Be Increasing Its Dividend To $0.22

The board of Hillenbrand, Inc. (NYSE:HI) has announced that the dividend on 30th of December will be increased to $0.22, which will be 1.1% higher than last year's payment of $0.218 which covered the same period. This makes the dividend yield about the same as the industry average at 1.7%.

Check out our latest analysis for Hillenbrand

Hillenbrand's Dividend Is Well Covered By Earnings

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. However, prior to this announcement, Hillenbrand'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.

Over the next year, EPS is forecast to expand by 17.3%. If the dividend continues on this path, the payout ratio could be 25% by next year, which we think can be pretty sustainable going forward.

Hillenbrand Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.77 in 2012 to the most recent total annual payment of $0.87. This implies that the company grew its distributions at a yearly rate of about 1.2% 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 Has Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Hillenbrand has been growing its earnings per share at 8.9% a year over the past five years. Hillenbrand definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Hillenbrand Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Hillenbrand is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 1 warning sign for Hillenbrand that investors need to be conscious of moving forward. Is Hillenbrand not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.