Edgewell Personal Care (NYSE:EPC) Is Due To Pay A Dividend Of $0.15

The board of Edgewell Personal Care Company (NYSE:EPC) has announced that it will pay a dividend on the 9th of July, with investors receiving $0.15 per share. This means the annual payment will be 1.5% of the current stock price, which is lower than the industry average.

See our latest analysis for Edgewell Personal Care

Edgewell Personal Care's Dividend Is Well Covered By Earnings

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Edgewell Personal Care's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 38.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 15%, which is in the range that makes us comfortable with the sustainability of the dividend.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the dividend has gone from $2.00 total annually to $0.60. Dividend payments have fallen sharply, down 70% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see that Edgewell Personal Care has been growing its earnings per share at 11% a year over the past five years. Edgewell Personal Care definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Edgewell Personal Care Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 2 warning signs for Edgewell Personal Care you should be aware of, and 1 of them is a bit concerning. Is Edgewell Personal Care 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.