Regal Rexnord (NYSE:RRX) Is Paying Out A Dividend Of $0.35

Regal Rexnord Corporation's (NYSE:RRX) investors are due to receive a payment of $0.35 per share on 14th of July. The dividend yield is 0.9% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Regal Rexnord

Regal Rexnord's Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, Regal Rexnord was easily earning enough to 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 rise by 114.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 13%, which is in the range that makes us comfortable with the sustainability of the dividend.

Regal Rexnord Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was $0.76, compared to the most recent full-year payment of $1.40. This implies that the company grew its distributions at a yearly rate of about 6.3% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Regal Rexnord May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Although it's important to note that Regal Rexnord's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. If Regal Rexnord is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Regal Rexnord Looks Like A Great Dividend Stock

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 of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Regal Rexnord that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield 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.