Science Applications International's (NYSE:SAIC) Dividend Will Be $0.37

Science Applications International Corporation (NYSE:SAIC) will pay a dividend of $0.37 on the 27th of January. This means the annual payment is 1.4% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Science Applications International

Science Applications International's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, Science Applications International's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

The next year is set to see EPS grow by 34.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 23%, which is in the range that makes us comfortable with the sustainability of the dividend.

Science Applications International Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 9 years was $1.12 in 2014, and the most recent fiscal year payment was $1.48. This implies that the company grew its distributions at a yearly rate of about 3.1% over that duration. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

Science Applications International Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Science Applications International has impressed us by growing EPS at 6.2% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Science Applications International's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

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. As an example, we've identified 1 warning sign for Science Applications International that you should be aware of before investing. 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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