Hewlett Packard Enterprise (NYSE:HPE) Will Pay A Larger Dividend Than Last Year At $0.1425

Hewlett Packard Enterprise Company (NYSE:HPE) will increase its dividend from last year's comparable payment on the 16th of January to $0.1425. This will take the annual payment to 2.4% of the stock price, which is above what most companies in the industry pay.

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Hewlett Packard Enterprise's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate Hewlett Packard Enterprise's Could Struggle to Maintain Dividend Payments In The Future

Hewlett Packard Enterprise's Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Hewlett Packard Enterprise isn't generating any profits, and it is paying out a very high proportion of the cash it is earning. This makes us feel that the dividend will be hard to maintain.

Earnings per share is forecast to rise by 139.9% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

Check out our latest analysis for Hewlett Packard Enterprise

Hewlett Packard Enterprise Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.22 in 2015 to the most recent total annual payment of $0.57. This implies that the company grew its distributions at a yearly rate of about 10.0% over that duration. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Earnings per share has been crawling upwards at 2.9% per year. Hewlett Packard Enterprise isn't actually turning a profit, which makes it much harder for us to see how they can grow dividends.

Hewlett Packard Enterprise's Dividend Doesn't Look Sustainable

Overall, this is probably not a great income stock, even though the dividend is being raised at the moment. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. 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. However, there are other things to consider for investors when analysing stock performance. To that end, Hewlett Packard Enterprise has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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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.