Piper Sandler Companies' (NYSE:PIPR) Shareholders Will Receive A Bigger Dividend Than Last Year

Piper Sandler Companies (NYSE:PIPR) will increase its dividend from last year's comparable payment on the 13th of September to $0.65. This takes the annual payment to 1.4% of the current stock price, which unfortunately is below what the industry is paying.

View our latest analysis for Piper Sandler Companies

Piper Sandler Companies' Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, Piper Sandler Companies' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 11.5% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 42% by next year, which we think can be pretty sustainable going forward.

Piper Sandler Companies' Dividend Has Lacked Consistency

Piper Sandler Companies has been paying dividends for a while, but the track record isn't stellar. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. Since 2016, the annual payment back then was $1.25, compared to the most recent full-year payment of $3.60. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year 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

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Piper Sandler Companies has impressed us by growing EPS at 11% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Piper Sandler Companies Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Piper Sandler Companies is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Piper Sandler Companies that investors should know about before committing capital to this stock. Is Piper Sandler Companies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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