Worthington Industries (NYSE: WOR) pays bigger dividend than last year
Worthington Industries, Inc. (NYSE: WOR) announced that it will increase its dividend on June 29 to US $ 0.28. This brings the annual payout to 1.6% of the current share price, which is sadly less than what the industry is paying.
Check out our latest review for Worthington Industries
Worthington Industries dividend well covered by earnings
The dividend yield is a bit low, but the sustainability of payments is also an important part of valuing an income stock. However, prior to this announcement, Worthington Industries’ dividend was comfortably covered by cash flow and earnings. This means that most of its profits are kept to grow the business.
Looking ahead, earnings per share are expected to decline 46.9% over the next year. If the dividend continues on its recent path, we estimate the payout ratio could be 18%, which is comfortable for the company going forward.
Worthington Industries has a solid track record
The company has a long history of paying stable dividends. The dividend went from US $ 0.40 in 2011 to the last annual payment of US $ 1.12. This means that he increased his distributions by 11% per year during that period. So, dividends have grown quite quickly and, more impressively, they haven’t seen a noticeable drop during that time.
The dividend is expected to increase
Investors might be attracted to the stock depending on the quality of its payment history. Worthington Industries has impressed us by increasing EPS by 45% per year over the past five years. The earnings per share are growing at a steady pace and the payout ratio is low, which in our opinion is an ideal combination in a dividend stock because the company can quite easily increase the dividend in the future.
We really like the dividend from Worthington Industries
Overall, we think it could be an attractive income stock, and it’s only getting better by paying a higher dividend this year. The company generates a lot of cash, and profits also cover distributions quite easily. We have to stress that earnings are expected to decline over the next 12 months, which will not be a problem if this does not become a trend, but could cause some turbulence next year. Overall, this checks many of the boxes we look for when choosing an income stock.
Market movements attest to the high value of a coherent dividend policy compared to a more unpredictable policy. Still, there are a host of other factors that investors need to consider, aside from dividend payments, when analyzing a business. Just as an example we have encountered 4 warning signs for Worthington Industries you need to be aware of this, and 2 of them make us uncomfortable. We have also set up a list of global stocks with a solid dividend.
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