Yahoo Finance State Street (NYSE:STT) Will Pay A Dividend Of $0.69
State Street Corporation (NYSE:STT) has announced that it will pay a dividend of $0.69 per share on the 11th of July. This makes the dividend yield 3.7%, which is above the industry average.
View our latest analysis for State Street
State Street's Earnings Will Easily Cover The Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.
Having distributed dividends for at least 10 years, State Street has a long history of paying out a part of its earnings to shareholders. Past distributions do not necessarily guarantee future ones, but State Street's payout ratio of 49% is a good sign as this means that earnings decently cover dividends.
Over the next 3 years, EPS is forecast to expand by 71.4%. Analysts estimate the future payout ratio will be 32% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
State Street 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. Since 2014, the dividend has gone from $1.04 total annually to $2.76. This works out to be a compound annual growth rate (CAGR) of approximately 10% a year over that time. So, dividends have been growing pretty quickly, and even more impressively, they haven't experienced any notable falls during this period.
State Street May Find It Hard To Grow The Dividend
Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Unfortunately, State Street's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
Our Thoughts On State Street's Dividend
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The earnings coverage is acceptable for now, but with earnings on the decline we would definitely keep an eye on the payout ratio. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for State Street that investors should take into consideration. Is State Street 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.
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