Littelfuse (NASDAQ:LFUS) Has Re-Affirmed Its Dividend Of US$0.48

The board of Littelfuse, Inc. (NASDAQ:LFUS) has announced that it will pay a dividend on the 3rd of June, with investors receiving US$0.48 per share. This means the annual payment will be 0.8% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Littelfuse

Littelfuse's Dividend Is Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Littelfuse's dividend was comfortably covered by both cash flow and earnings. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 35.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.

Littelfuse Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2011, the first annual payment was US$0.60, compared to the most recent full-year payment of US$1.92. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Littelfuse has seen EPS rising for the last five years, at 13% per annum. Littelfuse definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Littelfuse Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. 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.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Littelfuse that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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