Yahoo Finance Spirax-Sarco Engineering (LON:SPX) Is Paying Out A Larger Dividend Than Last Year
Spirax-Sarco Engineering plc's (LON:SPX) dividend will be increasing from last year's payment of the same period to £1.1 on 19th of May. This takes the annual payment to 1.3% of the current stock price, which unfortunately is below what the industry is paying.
Check out our latest analysis for Spirax-Sarco Engineering
Spirax-Sarco Engineering's Dividend Is Well Covered By Earnings
Even a low dividend yield can be attractive if it is sustained for years on end. The last dividend was quite comfortably covered by Spirax-Sarco Engineering's earnings, but it was a bit tighter on the cash flow front. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.
Looking forward, earnings per share is forecast to rise by 22.2% over the next year. If the dividend continues on this path, the payout ratio could be 45% by next year, which we think can be pretty sustainable going forward.
Spirax-Sarco Engineering Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2013, the annual payment back then was £0.571, compared to the most recent full-year payment of £1.52. This means that it has been growing its distributions at 10% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Has Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Spirax-Sarco Engineering has impressed us by growing EPS at 7.3% per year over the past five years. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
In Summary
In summary, while it's always good to see the dividend being raised, we don't think Spirax-Sarco Engineering's payments are rock solid. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would be a touch cautious of relying on this stock primarily for the dividend income.
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 Spirax-Sarco Engineering 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.
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