Science Applications International (NYSE:SAIC) Has Announced A Dividend Of $0.37

Science Applications International Corporation (NYSE:SAIC) has announced that it will pay a dividend of $0.37 per share on the 26th of January. This payment means the dividend yield will be 1.2%, which is below the average for the industry.

Check out our latest analysis for Science Applications International

Science Applications International's Payment Has Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, Science Applications International was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to fall by 38.4%. If the dividend continues along recent trends, we estimate the payout ratio could be 26%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Science Applications International Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.12 total annually to $1.48. This implies that the company grew its distributions at a yearly rate of about 2.8% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Science Applications International has seen EPS rising for the last five years, at 16% per annum. Science Applications International definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Science Applications International's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. 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. To that end, Science Applications International has 3 warning signs (and 1 which is significant) we think you should know about. Is Science Applications International not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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