T-Mobile US' (NASDAQ:TMUS) Shareholders Will Receive A Bigger Dividend Than Last Year

T-Mobile US, Inc.'s (NASDAQ:TMUS) dividend will be increasing from last year's payment of the same period to $0.88 on 12th of December. Although the dividend is now higher, the yield is only 1.7%, which is below the industry average.

View our latest analysis for T-Mobile US

T-Mobile US' Future Dividend Projections Appear Well Covered By Earnings

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, T-Mobile US was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 76.5% over the next year. If the dividend continues on this path, the payout ratio could be 20% by next year, which we think can be pretty sustainable going forward.

T-Mobile US Doesn't Have A Long Payment History

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that T-Mobile US has been growing its earnings per share at 16% a year over the past five years. T-Mobile US definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like T-Mobile US' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. For example, we've picked out 3 warning signs for T-Mobile US that investors should know about before committing capital to this stock. 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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