nVent Electric (NYSE:NVT) Has Announced A Dividend Of $0.175

nVent Electric plc (NYSE:NVT) will pay a dividend of $0.175 on the 3rd of November. This payment means the dividend yield will be 1.3%, which is below the average for the industry.

Check out our latest analysis for nVent Electric

nVent Electric's Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, nVent Electric was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 5.6%. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.

nVent Electric Is Still Building Its Track Record

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The most recent annual payment of $0.70 is about the same as the annual payment 5 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that nVent Electric has grown earnings per share at 8.4% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for nVent Electric's prospects of growing its dividend payments in the future.

We Really Like nVent Electric's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

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. For example, we've picked out 1 warning sign for nVent Electric that investors should know about before committing capital to this stock. Is nVent Electric not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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