Yahoo Finance STERIS' (NYSE:STE) Upcoming Dividend Will Be Larger Than Last Year's
The board of STERIS plc (NYSE:STE) has announced that the dividend on 23rd of September will be increased to $0.47, which will be 9.3% higher than last year's payment of $0.43 which covered the same period. Despite this raise, the dividend yield of 0.8% is only a modest boost to shareholder returns.
See our latest analysis for STERIS
STERIS' 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. The last dividend was quite easily covered by STERIS' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Over the next year, EPS is forecast to expand by 108.0%. If the dividend continues along recent trends, we estimate the payout ratio will be 24%, which is in the range that makes us comfortable with the sustainability of the dividend.
STERIS Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2012, the annual payment back then was $0.68, compared to the most recent full-year payment of $1.72. This implies that the company grew its distributions at a yearly rate of about 9.7% over that duration. 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
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 STERIS has been growing its earnings per share at 22% a year over the past five years. STERIS is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.
We Really Like STERIS' Dividend
Overall, a dividend increase is always good, and we think that STERIS is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for STERIS that investors should know about before committing capital to this stock. Is STERIS not quite the opportunity you were looking for? Why not check out our selection of top 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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