FactSet Research Systems (NYSE:FDS) Will Pay A Larger Dividend Than Last Year At $1.04

The board of FactSet Research Systems Inc. (NYSE:FDS) has announced that it will be increasing its dividend by 6.1% on the 20th of June to $1.04, up from last year's comparable payment of $0.98. Although the dividend is now higher, the yield is only 0.9%, which is below the industry average.

Check out our latest analysis for FactSet Research Systems

FactSet Research Systems' Payment Has Solid Earnings Coverage

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, FactSet Research Systems' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 45.6% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.

FactSet Research Systems 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 $1.40 in 2014, and the most recent fiscal year payment was $3.92. This works out to be a compound annual growth rate (CAGR) of approximately 11% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

FactSet Research Systems Could Grow Its Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that FactSet Research Systems has grown earnings per share at 9.5% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for FactSet Research Systems' prospects of growing its dividend payments in the future.

We Really Like FactSet Research Systems' Dividend

Overall, a dividend increase is always good, and we think that FactSet Research Systems is a strong income stock thanks to its track record and growing earnings. 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. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for FactSet Research Systems that you should be aware of before investing. 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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