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Weis Markets, Inc. (NYSE:WMK) will pay a dividend of $0.34 on the 4th of March. This makes the dividend yield 2.0%, which will augment investor returns quite nicely.
View our latest analysis for Weis Markets
Weis Markets' Projected Earnings Seem Likely To Cover Future Distributions
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, prior to this announcement, Weis Markets' dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.
If the trend of the last few years continues, EPS will grow by 9.0% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 36%, which is in the range that makes us comfortable with the sustainability of the dividend.
Weis Markets Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2015, the dividend has gone from $1.20 total annually to $1.36. This works out to be a compound annual growth rate (CAGR) of approximately 1.3% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Weis Markets Could Grow Its Dividend
Investors could be attracted to the stock based on the quality of its payment history. Weis Markets has seen EPS rising for the last five years, at 9.0% per annum. Weis Markets definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Weis Markets Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Weis Markets might even raise payments in the future. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All in all, this checks a lot of the boxes we look for when choosing an income stock.
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. See if management have their own wealth at stake, by checking insider shareholdings in Weis Markets stock. 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.