Stanley Black & Decker, Inc. (NYSE: SWK) announced that it will increase its dividend on September 21 to US $ 0.79. Based on the announced payment, the dividend yield for the company will be 1.5%, which is fairly typical for the industry.
See our latest review for Stanley Black & Decker
Stanley Black & Decker’s Profits Easily Cover Distributions
We like a dividend to be consistent over the long term, so it’s important to check if it’s sustainable. However, prior to this announcement, Stanley Black & Decker’s dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is used to help it grow.
Over the next year, EPS is expected to increase 2.6%. If the dividend continues according to recent trends, we estimate the payout ratio will be 26%, which is within the range that puts us at ease with the sustainability of the dividend.
Stanley Black & Decker has a solid track record
The company has a long history of paying stable dividends. The dividend went from US $ 1.36 in 2011 to the most recent annual payment of US $ 3.16. This works out to a compound annual growth rate (CAGR) of around 8.8% per year over that time period. The dividend has increased very well for several years and has provided its shareholders with good income in their portfolios.
The dividend seems likely to increase
Some investors will be eager to buy a portion of the company’s stock based on its dividend history. We are encouraged to see that Stanley Black & Decker has increased its earnings per share by 11% per year over the past five years. A low payout rate and decent growth suggest that the company is reinvesting well and that it also has enough margin to increase the dividend over time.
We really like the Stanley Black & Decker dividend
Overall, a rise in dividends is always good, and we think Stanley Black & Decker is a solid income stock thanks to its track record and growing earnings. The company easily earns enough to cover its dividend payments and it’s great to see that those profits translate into cash flow. Overall, this ticks a lot of the boxes that we look for when choosing an income stock.
Market movements testify to the high value of a coherent dividend policy compared to a more unpredictable one. However, there are other things for investors to consider when analyzing the performance of stocks. For example, we have selected 1 warning sign for Stanley Black & Decker that investors should be aware of before committing capital to this stock. Looking for more high yield dividend ideas? Try our organized list of big dividend payers.
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