Progress Software's (NASDAQ:PRGS) Dividend Will Be $0.175

Progress Software Corporation (NASDAQ:PRGS) has announced that it will pay a dividend of $0.175 per share on the 15th of March. The dividend yield will be 1.2% based on this payment which is still above the industry average.

View our latest analysis for Progress Software

Progress Software's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Progress Software'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.

Over the next year, EPS is forecast to expand by 72.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

Progress Software Is Still Building Its Track Record

Progress Software's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. Since 2017, the annual payment back then was $0.50, compared to the most recent full-year payment of $0.70. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. Progress Software hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Progress Software Could Grow Its Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Progress Software has been growing its earnings per share at 8.1% a year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.

We Really Like Progress Software's Dividend

Overall, we like to see the dividend staying consistent, and we think Progress Software might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 2 warning signs 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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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.