Insperity's (NYSE:NSP) Upcoming Dividend Will Be Larger Than Last Year's

Insperity, Inc. (NYSE:NSP) will increase its dividend from last year's comparable payment on the 22nd of September to $0.57. This makes the dividend yield 2.3%, which is above the industry average.

View our latest analysis for Insperity

Insperity's Payment Has Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Insperity's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 1.0%. If the dividend continues on this path, the payout ratio could be 54% by next year, which we think can be pretty sustainable going forward.

Insperity Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.34 in 2013, and the most recent fiscal year payment was $2.28. This means that it has been growing its distributions at 21% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Insperity has been growing its earnings per share at 13% a year over the past five years. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

We Really Like Insperity's Dividend

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 in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Insperity that investors should take into consideration. Is Insperity not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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