Navient (NASDAQ:NAVI) Has Re-Affirmed Its Dividend Of US$0.16

Navient Corporation (NASDAQ:NAVI) has announced that it will pay a dividend of US$0.16 per share on the 18th of March. The dividend yield will be 3.6% based on this payment which is still above the industry average.

View our latest analysis for Navient

Navient's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, prior to this announcement, Navient's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 27.6% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could be 19%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Navient Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2012, the first annual payment was US$0.40, compared to the most recent full-year payment of US$0.64. This means that it has been growing its distributions at 4.8% per annum over that time. 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

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Navient has impressed us by growing EPS at 17% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Navient's prospects of growing its dividend payments in the future.

Navient Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Navient might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Navient has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about. Is Navient 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.