John Wiley & Sons, Inc. (NYSE:WLY) will increase its dividend on the 20th of July to US$0.35. The announced payment will take the dividend yield to 2.9%, which is in line with the average for the industry.
John Wiley & Sons' Payment Has Solid Earnings Coverage
We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Prior to this announcement, John Wiley & Sons' dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
EPS is set to fall by 8.3% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 58%, which is comfortable for the company to continue in the future.
John Wiley & Sons Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from US$0.80 in 2012 to the most recent annual payment of US$1.39. This implies that the company grew its distributions at a yearly rate of about 5.7% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
We Could See John Wiley & Sons' Dividend Growing
Investors could be attracted to the stock based on the quality of its payment history. John Wiley & Sons has seen EPS rising for the last five years, at 6.1% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.
John Wiley & Sons Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that John Wiley & Sons is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 2 warning signs for John Wiley & Sons that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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.