DICK'S Sporting Goods (NYSE:DKS) Is Paying Out A Larger Dividend Than Last Year

DICK'S Sporting Goods, Inc.'s (NYSE:DKS) dividend will be increasing from last year's payment of the same period to $1.21 on 11th of April. This will take the annual payment to 2.6% of the stock price, which is above what most companies in the industry pay.

See our latest analysis for DICK'S Sporting Goods

DICK'S Sporting Goods' Projected Earnings Seem Likely To Cover Future Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, based ont he last payment, DICK'S Sporting Goods was earning enough to cover the dividend pretty comfortably. The business is returning a large chunk of its cash to shareholders, which means it is not being used to grow the business.

Looking forward, earnings per share is forecast to rise by 15.3% over the next year. 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.

DICK'S Sporting Goods Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $0.50, compared to the most recent full-year payment of $4.85. This means that it has been growing its distributions at 26% per annum over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that DICK'S Sporting Goods has been growing its earnings per share at 33% a year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

In Summary

Overall, this is a reasonable dividend, and it being raised is an added bonus. On the plus side, the dividend looks sustainable by most measures but it is let down by the lack of cash flows. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

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. For example, we've identified 2 warning signs for DICK'S Sporting Goods (1 is a bit unpleasant!) that you should be aware of before investing. Is DICK'S Sporting Goods not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.