Pool (NASDAQ:POOL) Will Pay A Larger Dividend Than Last Year At $1.20

Pool Corporation's (NASDAQ:POOL) periodic dividend will be increasing on the 30th of May to $1.20, with investors receiving 9.1% more than last year's $1.10. Even though the dividend went up, the yield is still quite low at only 1.2%.

View our latest analysis for Pool

Pool's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. However, Pool's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 21.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 33% by next year, which is in a pretty sustainable range.

Pool Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.76 in 2014, and the most recent fiscal year payment was $4.40. This implies that the company grew its distributions at a yearly rate of about 19% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Pool has grown earnings per share at 17% per year over the past five years. Pool definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Pool's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 1 warning sign for Pool 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.