Global Payments (NYSE:GPN) Is Due To Pay A Dividend Of $0.25

Global Payments Inc. (NYSE:GPN) will pay a dividend of $0.25 on the 26th of December. This makes the dividend yield 1.3%, which will augment investor returns quite nicely.

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Global Payments' Payment Could Potentially Have Solid Earnings Coverage

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Global Payments 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 50.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 12%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Global Payments

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of $0.04 in 2015 to the most recent total annual payment of $1.00. This means that it has been growing its distributions at 38% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. We are encouraged to see that Global Payments has grown earnings per share at 33% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Global Payments Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Global Payments might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. For instance, we've picked out 1 warning sign for Global Payments that investors should take into consideration. Is Global Payments not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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