Progress Software (NASDAQ:PRGS) Has Affirmed Its Dividend Of $0.175

Progress Software Corporation (NASDAQ:PRGS) has announced that it will pay a dividend of $0.175 per share on the 17th of June. The dividend yield will be 1.4% based on this payment which is still above the industry average.

Check out our latest analysis for Progress Software

Progress Software's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Progress Software was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 80.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 26%, which is in the range that makes us comfortable with the sustainability of the dividend.

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Progress Software Is Still Building Its Track Record

It is great to see that Progress Software has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from an annual total of $0.50 in 2016 to the most recent total annual payment of $0.70. This means that it has been growing its distributions at 4.3% per annum over that time. Progress Software hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Progress Software Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Progress Software has grown earnings per share at 9.8% per year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

We Really Like Progress Software's Dividend

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

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. As an example, we've identified 3 warning signs for Progress Software that you should be aware of before investing. Is Progress Software not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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