Yahoo Finance Bristol-Myers Squibb (NYSE:BMY) Is Increasing Its Dividend To $0.57
The board of Bristol-Myers Squibb Company (NYSE:BMY) has announced that it will be paying its dividend of $0.57 on the 1st of May, an increased payment from last year's comparable dividend. This will take the dividend yield to an attractive 3.3%, providing a nice boost to shareholder returns.
Check out our latest analysis for Bristol-Myers Squibb
Bristol-Myers Squibb's Earnings Easily Cover The Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before this announcement, Bristol-Myers Squibb was paying out 74% of earnings, but a comparatively small 40% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.
The next year is set to see EPS grow by 156.7%. 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.
Bristol-Myers Squibb Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $1.36 in 2013, and the most recent fiscal year payment was $2.28. This means that it has been growing its distributions at 5.3% per annum 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 Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. It's encouraging to see that Bristol-Myers Squibb has been growing its earnings per share at 37% a year over the past five years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which Bristol-Myers Squibb hasn't been doing.
We Really Like Bristol-Myers Squibb's Dividend
Overall, a dividend increase is always good, and we think that Bristol-Myers Squibb is a strong income stock thanks to its track record and growing earnings. 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. As an example, we've identified 3 warning signs for Bristol-Myers Squibb that you should be aware of before investing. 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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