Dover Corporation (NYSE: DOV) is set to trade ex-dividend in 4 days. The ex-dividend date is a business day before a company’s registration date, which is the date the company determines which shareholders are entitled to receive a dividend. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. Thus, you can buy the Dover shares before May 27 in order to receive the dividend, which the company will pay on June 15.
The company’s next dividend payment will be $ 0.49 per share, following last year when the company paid a total of $ 1.98 to shareholders. Based on the value of last year’s payouts, Dover has a 1.3% return on the current share price of $ 148.27. Dividends are an important source of income for many shareholders, but the health of the business is critical to sustaining those dividends. We need to see if the dividend is covered by profits and if it increases.
Check out our latest analysis for Dover
Dividends are usually paid out of company profits, so if a company pays more than it earned, its dividend is usually more at risk of being reduced. Dover shed a comfortable 38% of its profits last year. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by the cash flow. Thankfully, his dividend payments only made up 27% of the free cash flow he generated, which is a comfortable payout ratio.
It is positive to see that the Dover dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a higher margin of safety before the dividend is reduced.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If business slows down and the dividend is reduced, the company could see its value drop precipitously. That’s why it’s a relief to see Dover’s earnings per share grow 6.3% per year over the past five years. Management reinvested more than half of the company’s profits in the business, and the company was able to increase its profits with this retained capital. Organizations that reinvest heavily in themselves typically get stronger over time, which can bring exciting benefits like higher profits and dividends.
Many investors will assess a company’s dividend yield by evaluating how much dividend payments have changed over time. Since our data began 10 years ago, Dover has increased its dividend by around 6.1% per year on average. It’s encouraging to see the company increasing its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.
Should investors buy Dover for the upcoming dividend? Earnings per share rose moderately, and Dover pays less than half of its earnings and cash flow as dividends, which is an interesting combination because it suggests the company is investing in growth. We’d rather see earnings grow faster, but the best long-term dividend-paying stocks typically combine significant earnings per share growth with a low payout ratio, and Dover is halfway there. It is a promising combination that should mark this company worthy of special attention.
With this in mind, an essential part of thorough research on stocks is to be aware of all the risks that stocks currently face. To help you, we have discovered 2 warning signs for Dover which you should be aware of before investing in their stocks.
A common investment mistake is to buy the first interesting stock you see. Here you will find a list of promising dividend paying stocks with a yield above 2% and an upcoming dividend.
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