Hewlett Packard Enterprise (NYSE:HPE) Has Announced A Dividend Of $0.13

Hewlett Packard Enterprise Company's (NYSE:HPE) investors are due to receive a payment of $0.13 per share on 17th of October. Based on this payment, the dividend yield on the company's stock will be 2.2%, which is an attractive boost to shareholder returns.

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Hewlett Packard Enterprise's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last dividend, Hewlett Packard Enterprise is earning enough to cover the payment, but then it makes up 305% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Over the next year, EPS is forecast to expand by 127.1%. Assuming the dividend continues along recent trends, we think the payout ratio could be 29% by next year, which is in a pretty sustainable range.

See our latest analysis for Hewlett Packard Enterprise

Hewlett Packard Enterprise Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $0.22 total annually to $0.52. This means that it has been growing its distributions at 9.0% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

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. Hewlett Packard Enterprise has seen EPS rising for the last five years, at 307% per annum. 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 Hewlett Packard Enterprise could prove to be a strong dividend payer.

Our Thoughts On Hewlett Packard Enterprise's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Hewlett Packard Enterprise is earning enough to cover the payments, the cash flows are lacking. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular 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 identified 5 warning signs for Hewlett Packard Enterprise (1 is potentially serious!) 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 yield 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.