FactSet Research Systems (NYSE:FDS) Is Paying Out A Larger Dividend Than Last Year

FactSet Research Systems Inc. (NYSE:FDS) has announced that it will be increasing its dividend on the 16th of June to US$0.89, which will be 8.5% higher than last year. This takes the annual payment to 0.8% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for FactSet Research Systems

FactSet Research Systems' Payment Has Solid Earnings Coverage

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, FactSet Research Systems was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 6.4% over the next year. If the dividend continues on this path, the payout ratio could be 32% by next year, which we think can be pretty sustainable going forward.

FactSet Research Systems Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the first annual payment was US$1.08, compared to the most recent full-year payment of US$3.28. This means that it has been growing its distributions at 12% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

FactSet Research Systems 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. FactSet Research Systems has seen EPS rising for the last five years, at 5.2% per annum. FactSet Research Systems definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

FactSet Research Systems 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for FactSet Research Systems that investors should take into consideration. Is FactSet Research Systems not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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