Service Corporation International's (NYSE:SCI) Dividend Will Be Increased To $0.29

Service Corporation International's (NYSE:SCI) dividend will be increasing from last year's payment of the same period to $0.29 on 29th of September. The payment will take the dividend yield to 1.8%, which is in line with the average for the industry.

View our latest analysis for Service Corporation International

Service Corporation International's Payment Has Solid Earnings Coverage

Solid dividend yields are great, but they only really help us if the payment is sustainable. Before making this announcement, Service Corporation 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.

Looking forward, earnings per share is forecast to rise by 30.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 29%, which is in the range that makes us comfortable with the sustainability of the dividend.

Service Corporation International Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.24 in 2013 to the most recent total annual payment of $1.16. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Service Corporation International May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. However, Service Corporation International has only grown its earnings per share at 4.3% per annum over the past five years. If Service Corporation International is struggling to find viable investments, it always has the option to increase its payout ratio to pay more to shareholders.

Service Corporation International Looks Like A Great Dividend Stock

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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Service Corporation International (1 can't be ignored!) that you should be aware of before investing. Is Service Corporation International 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.