Primoris Services (NASDAQ: PRIM) announced dividend of US $ 0.06
Primoris service company (NASDAQ: PRIM) announced that it will pay a dividend of US $ 0.06 per share on July 15. Based on this payment, the dividend yield on the company’s shares will be 0.8%, which is an attractive incentive for shareholder returns.
Consult our latest analysis of Primoris services
Primoris Services payment provides strong revenue coverage
A high dividend yield for a few years doesn’t mean much if it can’t be sustained. Prior to making this announcement, Primoris Services was easily earning enough to cover the dividend. This means that most of its profits are kept to grow the business.
Over the next year, EPS is expected to increase 6.1%. Assuming the dividend continues on recent trends, we believe the payout ratio could be 10% by next year, which is within a fairly sustainable range.
Primoris Services has a solid track record
The company has been paying a dividend for a long time, and it has been fairly stable, which gives us confidence in the future dividend potential. Since 2011, the dividend has increased from US $ 0.10 to US $ 0.24. This means that the company has increased its distributions at an annual rate of approximately 9.1% during this time. Dividends have grown at a reasonable rate over this time frame, and without any major payout cuts over time, we think this is an attractive combination as it provides a good boost to returns for shareholders.
The dividend is expected to increase
Investors who have held shares of the company for the past several years will be pleased with the dividend income they have received. We are encouraged to see that Primoris Services has increased its earnings per share by 26% per year over the past five years. A low payout ratio gives the company great flexibility, and the growth in earnings also allows it to increase the dividend very easily.
The company has also raised capital by issuing shares equivalent to 11% of the outstanding shares in the past 12 months. Doing this regularly can be detrimental – it is difficult to increase dividends per share when new shares are regularly created.
Primoris Services looks like a big dividend
In summary, it’s good to see that the dividend remains constant, and we don’t think there is any reason to suspect that this could change in the medium term. The company easily earns enough to cover its dividend payments and it is great to see that those profits are converted into cash flow. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.
Firms with a stable dividend policy will likely benefit from greater investor interest than those with a more inconsistent approach. However, there are other things for investors to consider when analyzing the performance of stocks. As an example, we have identified 3 warning signs for Primoris Services which you should be aware of before investing. Looking for more high yield dividend ideas? Try our organized list of good dividend payers.
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