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Dover's (NYSE:DOV) Dividend Will Be $0.505

Dover Corporation (NYSE:DOV) will pay a dividend of $0.505 on the 15th of June. This means the annual payment will be 1.4% of the current stock price, which is lower than the industry average.

Check out our latest analysis for Dover

Dover's Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Dover's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

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The next year is set to see EPS grow by 36.6%. If the dividend continues along recent trends, we estimate the payout ratio will be 20%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
historic-dividend

Dover Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the dividend has gone from $1.26 total annually to $2.02. This means that it has been growing its distributions at 4.8% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Dover has grown earnings per share at 11% per year over the past five years. Dover definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Dover Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Dover might even raise payments in the future. 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. Taking the debate a bit further, we've identified 2 warning signs for Dover that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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