Best Buy Co., Inc. (NYSE:BBY) will pay a dividend of $0.94 on the 11th of July, resulting in a dividend yield of 4.3%, which is above the industry average.
When considering the sustainability of the dividend payment, it is important to note that Best Buy has been comfortably earning enough to cover the dividend based on its last payment. This indicates that a significant portion of earnings is being reinvested back into the business.
Looking ahead, EPS is forecasted to expand by 34.6% over the next year. Assuming the dividend continues along recent trends, the payout ratio could reach 56% by next year, which is considered sustainable.
Best Buy has a solid track record of paying dividends, with annual payments increasing from $0.68 in 2014 to $3.76 recently. This represents a growth rate of 19% per annum. The company’s consistent dividend history provides confidence in its future dividend potential.
While Best Buy’s dividend growth prospects may be limited due to its flat EPS over the past five years, the company’s stable dividend payments and strong cash flow conversion make it an attractive income stock.
Overall, Best Buy appears to be a good dividend opportunity, with distributions easily covered by earnings. Investors should consider the company’s consistent dividend policy and other factors before making investment decisions. Additionally, it is important to be aware of any warning signs, such as the one identified for Best Buy in this article.
For a comprehensive analysis of Best Buy’s valuation, including fair value estimates, risks, dividends, insider transactions, and financial health, readers can access our Free Analysis.
Feedback on this article or concerns about its content can be directed to us directly or via email. It is important to note that this article by Simply Wall St is based on historical data and analyst forecasts, and is not intended to be financial advice. We aim to provide unbiased analysis driven by fundamental data.