NetApp (NASDAQ:NTAP) Has Announced A Dividend Of $0.52
NetApp, Inc. (NASDAQ:NTAP) has announced a dividend of $0.52 per share to be paid on January 21st, yielding 1.8%. The dividend is well-covered by earnings and cash flow, with a payout ratio estimated at 31%. NetApp has a strong track record of dividend growth, with annual payments increasing at about 11% over the past decade. The company’s EPS has grown by 14% per year over the past five years, indicating potential for future dividend growth. Overall, NetApp is considered a reliable dividend stock.
The board of NetApp, Inc. (NASDAQ:NTAP) has announced that it will pay a dividend of $0.52 per share on the 21st of January. This makes the dividend yield 1.8%, which will augment investor returns quite nicely.
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NetApp's Payment Could Potentially Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, NetApp's 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.
The next year is set to see EPS grow by 23.8%. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
See our latest analysis for NetApp
NetApp Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was $0.72 in 2015, and the most recent fiscal year payment was $2.08. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. NetApp has impressed us by growing EPS at 14% per year over the past five years. NetApp definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
NetApp Looks Like A Great Dividend Stock
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. 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.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 1 warning sign for NetApp that investors should know about before committing capital to this stock. Is NetApp not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
