RS Group plc (LON:RS1) has recently announced that it will be paying a dividend of £0.137 per share on the 19th of July, with a dividend yield of 3.0%. This news has excited investors as it is expected to enhance their returns.
The company’s dividend is well covered by its earnings, with RS Group comfortably earning enough to cover the dividend based on its last payment. This indicates that a significant portion of its earnings are being retained to fuel the growth of the business.
Looking ahead, earnings per share are forecasted to increase by 47.4% over the next year. Assuming the dividend continues along recent trends, the payout ratio could be 41% by next year, which is considered to be in a sustainable range.
RS Group has a solid track record of paying dividends with minimal fluctuation. The dividend has been steadily increasing from an annual total of £0.118 in 2014 to the most recent total annual payment of £0.22, growing at a rate of 6.5% per annum. This consistent growth has provided shareholders with a reliable source of income.
However, the company may face challenges in growing its dividend in the future, as earnings have only been growing at a modest 3.0% per annum. Despite this, RS Group’s consistent dividend policy and strong earnings coverage make it an attractive opportunity for investors.
In conclusion, RS Group’s stable dividend policy and strong earnings make it a promising investment option for those seeking reliable returns. Investors are advised to keep an eye on the company’s performance and any potential warning signs that may arise in the future.