Bristol-Myers Squibb (NYSE:BMY) Has Announced That It Will Be Increasing Its Dividend To $0.60

Bristol-Myers Squibb Company (NYSE:BMY) will increase its dividend from last year's comparable payment on the 1st of February to $0.60. This will take the dividend yield to an attractive 4.6%, providing a nice boost to shareholder returns.

See our latest analysis for Bristol-Myers Squibb

Bristol-Myers Squibb's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Bristol-Myers Squibb's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next year is set to see EPS grow by 39.3%. If the dividend continues on this path, the payout ratio could be 43% by next year, which we think can be pretty sustainable going forward.

Bristol-Myers Squibb Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $1.40 in 2013, and the most recent fiscal year payment was $2.40. This means that it has been growing its distributions at 5.5% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Bristol-Myers Squibb has been growing its earnings per share at 36% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Bristol-Myers Squibb could prove to be a strong dividend payer.

Bristol-Myers Squibb Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Bristol-Myers Squibb 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Bristol-Myers Squibb 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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