Belvoir Group PLC (LON:BLV) will increase its dividend on the 22nd of May to £0.05, which is 11% higher than last year's payment from the same period of £0.045. This makes the dividend yield about the same as the industry average at 4.2%.
Check out our latest analysis for Belvoir Group
Belvoir Group's Payment Has Solid Earnings Coverage
Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Belvoir Group was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, earnings per share is forecast to fall by 8.9% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 51%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the annual payment back then was £0.058, compared to the most recent full-year payment of £0.09. This works out to be a compound annual growth rate (CAGR) of approximately 4.5% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
The Dividend Looks Likely To Grow
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Belvoir Group has been growing its earnings per share at 18% a year over the past five years. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
We Really Like Belvoir Group's Dividend
Overall, a dividend increase is always good, and we think that Belvoir Group is a strong income stock thanks to its track record and growing earnings. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income 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. For example, we've identified 3 warning signs for Belvoir Group (1 doesn't sit too well with us!) that you should be aware of before investing. Is Belvoir Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.