Brooks Macdonald Group's (LON:BRK) Dividend Will Be Increased To £0.28
The board of Brooks Macdonald Group plc (LON:BRK) has announced that it will be increasing its dividend by 7.7% on the 6th of April to £0.28, up from last year's comparable payment of £0.26. The payment will take the dividend yield to 3.6%, which is in line with the average for the industry.
View our latest analysis for Brooks Macdonald Group
Brooks Macdonald Group's Payment Has Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much. Prior to this announcement, Brooks Macdonald Group's dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share is forecast to rise by 21.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 49%, which is in the range that makes us comfortable with the sustainability of the dividend.
Brooks Macdonald Group Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was £0.185, compared to the most recent full-year payment of £0.71. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year 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 Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Brooks Macdonald Group has seen EPS rising for the last five years, at 35% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
Brooks Macdonald Group Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Brooks Macdonald Group 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 in all, this checks a lot of the boxes we look for when choosing an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for Brooks Macdonald Group that you should be aware of before investing. 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.
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