STERIS increases dividend by 9.6%: Strong signal despite below-average yield

STERIS Corporation has announced that it will increase its periodic dividend by 9.6% to $0.57 on September 20. Compared to last year's value of $0.52, this may represent a pleasing development; however, in industry comparison, the annual payout of 0.9% of the current share price is below average. Although the dividend yield is a significant aspect for investors, the sustainability of payout rates is equally important. In this context, STERIS is well positioned: Corporate earnings cover dividend payments without difficulty. A substantial portion of the earnings is also reinvested into the company, indicating a solid growth strategy. Forecasts suggest that earnings per share are set to rise by an impressive 62.1% next year. If this trend continues, the payout ratio could be a sustainable 26% next year. This may be very positive for future dividend increases and offers investors an interesting perspective. The history of STERIS's dividend payments is also noteworthy: Since 2014, the annual payout has increased from $0.84 to $2.08. This corresponds to an annual growth rate of approximately 9.5%. This reliable growth dynamic could provide investors with additional returns for their portfolios. The positive development of earnings per share over the past five years, with an annual growth rate of 9.2%, supports the optimistic forecast. Combined with a low payout ratio and stable cash flows, the future for STERIS’s dividend payments looks promising. In summary, the increase in the dividend represents a positive development that positions STERIS as an attractive income stock. Given the stable balance sheet and strong earnings growth, the company meets many criteria that investors look for when choosing an income stock.