Gilead Sciences (NASDAQ:GILD) Is Paying Out A Larger Dividend Than Last Year

The board of Gilead Sciences, Inc. (NASDAQ:GILD) has announced that it will be paying its dividend of $0.75 on the 29th of June, an increased payment from last year's comparable dividend. This makes the dividend yield 3.9%, which is above the industry average.

Check out our latest analysis for Gilead Sciences

Gilead Sciences' Earnings Easily Cover The Distributions

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Gilead Sciences' earnings. This means that a large portion of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 30.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 56%, which is in the range that makes us comfortable with the sustainability of the dividend.

Gilead Sciences Doesn't Have A Long Payment History

Gilead Sciences' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2015, the dividend has gone from $1.72 total annually to $3.00. This means that it has been growing its distributions at 7.2% per annum over that time. Gilead Sciences has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Gilead Sciences has impressed us by growing EPS at 11% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Gilead Sciences' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 3 warning signs for Gilead Sciences that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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