Yahoo Finance Parker-Hannifin (NYSE:PH) Is Increasing Its Dividend To $1.63
The board of Parker-Hannifin Corporation (NYSE:PH) has announced that the dividend on 7th of June will be increased to $1.63, which will be 10% higher than last year's payment of $1.48 which covered the same period. Although the dividend is now higher, the yield is only 1.1%, which is below the industry average.
See our latest analysis for Parker-Hannifin
Parker-Hannifin's Earnings Easily Cover The Distributions
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, prior to this announcement, Parker-Hannifin's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
The next year is set to see EPS grow by 27.5%. Assuming the dividend continues along recent trends, we think the payout ratio could be 24% by next year, which is in a pretty sustainable range.
Parker-Hannifin Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was $1.80 in 2014, and the most recent fiscal year payment was $5.92. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. Parker-Hannifin has seen EPS rising for the last five years, at 14% per annum. Parker-Hannifin definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Parker-Hannifin Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Parker-Hannifin is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for Parker-Hannifin that investors should know about before committing capital to this stock. Is Parker-Hannifin 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.
