Perdoceo Education Corporation (NASDAQ:PRDO) has announced that it will be increasing its dividend from last year's comparable payment on the 12th of September to $0.15. This takes the annual payment to 2.0% of the current stock price, which is about average for the industry.
Perdoceo Education's Projected Earnings Seem Likely To Cover Future Distributions
Unless the payments are sustainable, the dividend yield doesn't mean too much. Before making this announcement, Perdoceo Education was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Over the next year, EPS is forecast to expand by 5.4%. If the dividend continues on this path, the payout ratio could be 22% by next year, which we think can be pretty sustainable going forward.
See our latest analysis for Perdoceo Education
Perdoceo Education Is Still Building Its Track Record
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of $0.44 in 2023 to the most recent total annual payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 17% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
We Could See Perdoceo Education's Dividend Growing
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Perdoceo Education has grown earnings per share at 10.0% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.
We Really Like Perdoceo Education's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Perdoceo Education that you should be aware of before investing. Is Perdoceo Education not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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