Agilent Technologies' (NYSE:A) Shareholders Will Receive A Bigger Dividend Than Last Year

Agilent Technologies, Inc. (NYSE:A) will increase its dividend on the 22nd of January to $0.248, which is 5.1% higher than last year's payment from the same period of $0.236. This takes the dividend yield to 0.7%, which shareholders will be pleased with.

See our latest analysis for Agilent Technologies

Agilent Technologies' Payment Could Potentially Have Solid Earnings Coverage

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Agilent Technologies' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 14.3%. If the dividend continues on this path, the payout ratio could be 18% by next year, which we think can be pretty sustainable going forward.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was $0.528 in 2014, and the most recent fiscal year payment was $0.944. This works out to be a compound annual growth rate (CAGR) of approximately 6.0% a year over that time. It's good to see the dividend growing at a decent rate, but the dividend has been cut at least once in the past. Agilent Technologies might have put its house in order since then, but we remain cautious.

Agilent Technologies Could Grow Its Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Agilent Technologies has grown earnings per share at 7.7% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Agilent Technologies' Dividend

Overall, it's great to see the dividend being raised and that it is still in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 18 Agilent Technologies analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Agilent Technologies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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