AZZ (NYSE:AZZ) Has Affirmed Its Dividend Of $0.17

AZZ Inc. (NYSE:AZZ) will pay a dividend of $0.17 on the 31st of July. This means the annual payment will be 0.9% of the current stock price, which is lower than the industry average.

View our latest analysis for AZZ

AZZ's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. However, AZZ'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 is forecast to expand by 68.1%. If the dividend continues on this path, the payout ratio could be 14% by next year, which we think can be pretty sustainable going forward.

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AZZ Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.56 in 2014 to the most recent total annual payment of $0.68. This works out to be a compound annual growth rate (CAGR) of approximately 2.0% a year over that time. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

AZZ Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. AZZ has impressed us by growing EPS at 8.3% per year over the past five years. AZZ definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

An additional note is that the company has been raising capital by issuing stock equal to 19% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

AZZ Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, AZZ has 2 warning signs (and 1 which can't be ignored) we think you should know about. 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.

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