Yahoo Finance Encompass Health (NYSE:EHC) Has Affirmed Its Dividend Of US$0.28
The board of Encompass Health Corporation (NYSE:EHC) has announced that it will pay a dividend of US$0.28 per share on the 20th of July. This means the annual payment is 2.1% of the current stock price, which is above the average for the industry.
See our latest analysis for Encompass Health
Encompass Health's Earnings Easily Cover the Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Encompass Health's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
The next year is set to see EPS grow by 0.6%. If the dividend continues on this path, the payout ratio could be 30% by next year, which we think can be pretty sustainable going forward.
Encompass Health Doesn't Have A Long Payment History
It is great to see that Encompass Health has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The first annual payment during the last 9 years was US$0.72 in 2013, and the most recent fiscal year payment was US$1.12. This means that it has been growing its distributions at 5.0% per annum over that time. Encompass Health has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.
Encompass Health Could Grow Its Dividend
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 Encompass Health has grown earnings per share at 6.4% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Encompass Health's prospects of growing its dividend payments in the future.
Our Thoughts On Encompass Health's Dividend
Overall, we think Encompass Health is a solid choice as a dividend stock, even though the dividend wasn't raised this year. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 Encompass Health 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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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.
