PriceSmart's (NASDAQ:PSMT) Dividend Will Be $0.58

PriceSmart, Inc. (NASDAQ:PSMT) will pay a dividend of $0.58 on the 30th of August. This takes the annual payment to 1.4% of the current stock price, which is about average for the industry.

See our latest analysis for PriceSmart

PriceSmart's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, PriceSmart was easily earning enough to 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 11.2%. If the dividend continues along recent trends, we estimate the payout ratio will be 50%, which is in the range that makes us comfortable with the sustainability of the dividend.

PriceSmart Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.70 in 2014, and the most recent fiscal year payment was $1.16. This means that it has been growing its distributions at 5.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

PriceSmart 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. PriceSmart has impressed us by growing EPS at 9.8% 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.

We Really Like PriceSmart's Dividend

Overall, a dividend increase is always good, and we think that PriceSmart is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Companies that are growing earnings tend to be the best dividend stocks over the long term. See what the 3 analysts we track are forecasting for PriceSmart for free with public analyst estimates for the company. Is PriceSmart not quite the opportunity you were looking for? Why not check out our selection of top 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.