Bovis Homes Group PLC (LON:BVS) is about to trade ex-dividend in the next 2 days. Investors can purchase shares before the 26th of September in order to be eligible for this dividend, which will be paid on the 22nd of November.
Bovis Homes Group's next dividend payment will be UK£0.2 per share, and in the last 12 months, the company paid a total of UK£0.6 per share. Last year's total dividend payments show that Bovis Homes Group has a trailing yield of 5.1% on the current share price of £11.22. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
See our latest analysis for Bovis Homes Group
Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Bovis Homes Group is paying out an acceptable 54% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. Fortunately, it paid out only 31% of its free cash flow in the past year.
It's positive to see that Bovis Homes Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. For this reason, we're glad to see Bovis Homes Group's earnings per share have risen 19% per annum over the last five years. Bovis Homes Group has an average payout ratio which suggests a balance between growing earnings and rewarding shareholders. This is a reasonable combination that could hint at some further dividend increases in the future.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Bovis Homes Group has delivered an average of 39% per year annual increase in its dividend, based on the past nine years of dividend payments. Both per-share earnings and dividends have both been growing rapidly in recent times, which is great to see.