Hewlett Packard Enterprise (NYSE:HPE) Has Announced A Dividend Of $0.12

The board of Hewlett Packard Enterprise Company (NYSE:HPE) has announced that it will pay a dividend of $0.12 per share on the 7th of October. The dividend yield will be 3.6% based on this payment which is still above the industry average.

View our latest analysis for Hewlett Packard Enterprise

Hewlett Packard Enterprise's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before making this announcement, Hewlett Packard Enterprise 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 fall by 48.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 38%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Hewlett Packard Enterprise Doesn't Have A Long Payment History

Hewlett Packard Enterprise'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. The annual payment during the last 7 years was $0.22 in 2015, and the most recent fiscal year payment was $0.48. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

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. We are encouraged to see that Hewlett Packard Enterprise has grown earnings per share at 99% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.

Hewlett Packard Enterprise Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Hewlett Packard Enterprise might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 4 warning signs for Hewlett Packard Enterprise you should be aware of, and 2 of them shouldn't be ignored. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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