Simpson Manufacturing's (NYSE:SSD) Dividend Will Be Increased To $0.29

Simpson Manufacturing Co., Inc. (NYSE:SSD) has announced that it will be increasing its dividend from last year's comparable payment on the 24th of July to $0.29. Although the dividend is now higher, the yield is only 0.8%, which is below the industry average.

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Simpson Manufacturing's Future Dividend Projections Appear Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, Simpson Manufacturing's earnings easily 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 8.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 14% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Simpson Manufacturing

Simpson Manufacturing Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.56 in 2015, and the most recent fiscal year payment was $1.16. This implies that the company grew its distributions at a yearly rate of about 7.6% 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.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Simpson Manufacturing has seen EPS rising for the last five years, at 18% per annum. Simpson Manufacturing definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Simpson Manufacturing Looks Like A Great Dividend Stock

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Earnings growth generally bodes well for the future value of company dividend payments. See if the 3 Simpson Manufacturing analysts we track are forecasting continued growth with our free report on analyst estimates for the company. 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.