Zurn Elkay Water Solutions (NYSE:ZWS) Is Due To Pay A Dividend Of $0.09

Zurn Elkay Water Solutions Corporation's (NYSE:ZWS) investors are due to receive a payment of $0.09 per share on 6th of June. This payment means the dividend yield will be 1.0%, which is below the average for the industry.

We've discovered 1 warning sign about Zurn Elkay Water Solutions. View them for free.

Zurn Elkay Water Solutions' Projected Earnings Seem Likely To Cover Future Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Zurn Elkay Water Solutions' 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 31.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Zurn Elkay Water Solutions

Zurn Elkay Water Solutions' Dividend Has Lacked Consistency

It's comforting to see that Zurn Elkay Water Solutions has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2020, the annual payment back then was $0.32, compared to the most recent full-year payment of $0.36. This works out to be a compound annual growth rate (CAGR) of approximately 2.4% a year over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Zurn Elkay Water Solutions has grown earnings per share at 89% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Zurn Elkay Water Solutions Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Zurn Elkay Water Solutions might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Zurn Elkay Water Solutions that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.