Australia markets closed
  • ALL ORDS

    6,953.40
    +59.80 (+0.87%)
     
  • AUD/USD

    0.6951
    +0.0026 (+0.37%)
     
  • ASX 200

    6,763.60
    +57.60 (+0.86%)
     
  • OIL

    110.99
    +1.42 (+1.30%)
     
  • GOLD

    1,827.50
    +2.70 (+0.15%)
     
  • BTC-AUD

    30,392.38
    -629.42 (-2.03%)
     
  • CMC Crypto 200

    461.10
    -0.70 (-0.15%)
     

Watts Water Technologies (NYSE:WTS) Is Paying Out A Larger Dividend Than Last Year

  • Oops!
    Something went wrong.
    Please try again later.
·2-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

The board of Watts Water Technologies, Inc. (NYSE:WTS) has announced that the dividend on 15th of June will be increased to US$0.30, which will be 15% higher than last year. Even though the dividend went up, the yield is still quite low at only 0.8%.

See our latest analysis for Watts Water Technologies

Watts Water Technologies' Dividend Is 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. However, prior to this announcement, Watts Water Technologies' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 14.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 19% by next year, which is in a pretty sustainable range.

historic-dividend
historic-dividend

Watts Water Technologies Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the first annual payment was US$0.44, compared to the most recent full-year payment of US$1.04. This works out to be a compound annual growth rate (CAGR) of approximately 9.0% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Watts Water Technologies has impressed us by growing EPS at 15% per year over the past five years. Watts Water Technologies definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

We Really Like Watts Water Technologies' Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Watts Water Technologies that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting