AptarGroup (NYSE:ATR) Has Announced That It Will Be Increasing Its Dividend To $0.45

AptarGroup, Inc.'s (NYSE:ATR) periodic dividend will be increasing on the 15th of August to $0.45, with investors receiving 9.8% more than last year's $0.41. Even though the dividend went up, the yield is still quite low at only 1.1%.

See our latest analysis for AptarGroup

AptarGroup's 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, AptarGroup 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 24.7% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 30%, which is in the range that makes us comfortable with the sustainability of the dividend.

AptarGroup Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was $1.00, compared to the most recent full-year payment of $1.64. This works out to be a compound annual growth rate (CAGR) of approximately 5.1% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

AptarGroup Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. AptarGroup has seen EPS rising for the last five years, at 8.3% per annum. 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.

AptarGroup Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 1 warning sign for AptarGroup that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.

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