Genuine Parts Company (NYSE:GPC) will increase its dividend from last year’s comparable payment on the 1st of April to $1.00. This will take the annual payment to 2.7% of the stock price, which is above what most companies in the industry pay.
See our latest analysis for Genuine Parts
Genuine Parts’ Payment Has Solid Earnings Coverage
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, Genuine Parts’ dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.
Looking forward, earnings per share is forecast to rise by 18.9% over the next year. 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…
