Republic Services, Inc. (NYSE: RSG) announced that it will increase its dividend on October 15 to US $ 0.46. Based on the announced payment, the dividend yield for the company will be 1.4%, which is fairly typical for the industry.
Republic Services payment has strong revenue coverage
We’re not overly impressed with dividend yields unless they can be sustained over time. The last dividend was fairly easily covered by the profits of Republic Services. This means that a large portion of its profits are kept to grow the business.
Next year, EPS is expected to increase by 18.8%. If the dividend continues on that path, the payout ratio could be 45% by next year, which we believe may be quite sustainable going forward.
Historic NYSE dividend: RSG September 17, 2021
Republic Services has a strong balance sheet
The company has a long history of paying stable dividends. Since 2011, the first annual payment was US $ 0.80, compared to the most recent annual payment of US $ 1.84. This means that he increased his distributions to 8.7% per annum during that period. Dividend growth has been quite reliable, so we believe this can provide investors with some nice extra income in their portfolio.
The dividend seems likely to increase
Investors in the company will be happy to receive dividends for some time. We are encouraged to see that Republic Services has increased its earnings per share by 11% per year over the past five years. Given that earnings per share are growing at an acceptable rate and the payout policy is balanced, we believe the company is well positioned to grow earnings and dividends going forward.
We really like the Republic Services dividend
In summary, it is always positive to see the dividend increase and we are particularly satisfied with its overall sustainability. Distributions are quite easily covered by profits, which are also converted into cash flow. Overall, this ticks a lot of the boxes that we look for when choosing an income stock.
Investors generally tend to favor companies with a consistent and stable dividend policy over those that operate irregularly. At the same time, there are other factors that our readers should be aware of before investing any capital in a stock. As an example, we have identified 1 warning sign for the services of the Republic that you need to know before you invest. We have also set up a list of global stocks with a solid dividend.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
Do you have any feedback on this item? Are you worried about the content? Get in touch with us directly. You can also send an email to the editorial team (at) simplywallst.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.