Progress Software Corporation’s (NASDAQ:PRGS) investors are due to receive a payment of $0.175 per share on 15th of September. The dividend yield will be 1.2% based on this payment which is still above the industry average.
View our latest analysis for Progress Software
Progress Software’s Payment Has Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Progress Software’s earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
Looking forward, earnings per share is forecast to rise by 41.1% over the next year. If the dividend continues on this path, the payout ratio could be 29% by next year, which we think can be pretty sustainable going forward.
Progress Software Is Still Building Its Track Record
Progress Software’s dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 7 years was $0.50 in 2016, and the most recent fiscal year payment was $0.70. This implies that the company grew its distributions at a yearly rate of about 4.9% over that duration. We like that the dividend hasn’t been decreasing. However, we’re aware that the company hasn’t got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.
The Dividend Looks Likely To Grow
The company’s investors will be pleased to have been receiving dividend income for some time. Progress Software has impressed us by growing EPS at 10% per year over the past five years. Progress Software definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like Progress Software’s Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. 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 aware of before pouring capital into a stock. As an example, we’ve identified 2 warning signs for Progress Software that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try ours collection of strong dividend payers.
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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.
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