Bowler Metcalf (JSE:BCF) Is Increasing Its Dividend To ZAR0.44

Bowler Metcalf Limited (JSE:BCF) has announced that it will be increasing its periodic dividend on the 27th of October to ZAR0.44, which will be 16% higher than last year's comparable payment amount of ZAR0.378. This takes the dividend yield to 4.7%, which shareholders will be pleased with.

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Bowler Metcalf'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. However, Bowler Metcalf's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS could expand by 9.8% if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.

Check out our latest analysis for Bowler Metcalf

Bowler Metcalf 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 ZAR0.35 in 2015 to the most recent total annual payment of ZAR0.628. This works out to be a compound annual growth rate (CAGR) of approximately 6.0% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Bowler Metcalf has seen EPS rising for the last five years, at 9.8% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Bowler Metcalf's prospects of growing its dividend payments in the future.

Bowler Metcalf Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Bowler Metcalf that investors should know about before committing capital to this stock. 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.