Progress Software (NASDAQ:PRGS) Is Paying Out A Dividend Of $0.175

Progress Software Corporation's (NASDAQ:PRGS) investors are due to receive a payment of $0.175 per share on 15th of September. This means the annual payment is 1.2% of the current stock price, which is above the average for the industry.

See our latest analysis for Progress Software

Progress Software's Payment Has Solid Earnings Coverage

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Progress Software was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 41.1% over the next year. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.

Progress Software Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The dividend has gone from an annual total of $0.50 in 2016 to the most recent total annual payment of $0.70. This works out to be a compound annual growth rate (CAGR) of approximately 4.9% a year over that time. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Progress Software has grown earnings per share at 10% 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.

Progress Software Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Progress Software might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. 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. For example, we've picked out 1 warning sign for Progress Software that investors should know about before committing capital to this stock. Is Progress Software not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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