CDW's (NASDAQ:CDW) Shareholders Will Receive A Bigger Dividend Than Last Year

CDW Corporation (NASDAQ:CDW) has announced that it will be increasing its dividend from last year's comparable payment on the 10th of December to $0.63. This will take the dividend yield to an attractive 1.8%, providing a nice boost to shareholder returns.

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CDW's Future Dividend Projections Appear Well Covered By Earnings

If the payments aren't sustainable, a high yield for a few years won't matter that much. However, prior to this announcement, CDW's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 30.9%. If the dividend continues on this path, the payout ratio could be 28% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for CDW

CDW Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of $0.27 in 2015 to the most recent total annual payment of $2.52. This means that it has been growing its distributions at 25% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

CDW Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. CDW has seen EPS rising for the last five years, at 9.4% per annum. CDW definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like CDW's Dividend

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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 1 warning sign for CDW that investors should know about before committing capital to this stock. Is CDW 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.