Benchmark Electronics (NYSE:BHE) Will Pay A Dividend Of $0.17

Benchmark Electronics, Inc. (NYSE:BHE) has announced that it will pay a dividend of $0.17 per share on the 13th of October. The dividend yield will be 1.7% based on this payment which is still above the industry average.

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Benchmark Electronics' Future Dividend Projections Appear Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Benchmark Electronics' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

Looking forward, earnings per share is forecast to rise by 40.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 48% by next year, which is in a pretty sustainable range.

View our latest analysis for Benchmark Electronics

Benchmark Electronics Doesn't Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. Since 2018, the annual payment back then was $0.60, compared to the most recent full-year payment of $0.68. This works out to be a compound annual growth rate (CAGR) of approximately 1.8% a year over that time. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. It's encouraging to see that Benchmark Electronics has been growing its earnings per share at 127% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Benchmark Electronics could prove to be a strong dividend payer.

We Really Like Benchmark Electronics' Dividend

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 in all, this checks a lot of the boxes we look for when choosing an income stock.

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 picked out 2 warning signs for Benchmark Electronics that investors should know about before committing capital to this stock. Is Benchmark Electronics not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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