Hilton Food Group (LON:HFG) to pay £0.096 dividend

Hilton plc Food Group (LON:HFG) announced it will pay a dividend of £0.096 per share on 29 November. This will lift the dividend yield to an attractive 3.6%, providing a nice boost to shareholder returns.

Check out our latest analysis for Hilton Food Group

Hilton Food Group’s future dividend projections appear to be well covered by earnings

A high dividend yield for several years doesn’t mean much if it can’t be sustained. Before this announcement, Hilton Food Group’s dividend was comfortably covered by both cash flow and profits. This means that a significant portion of profits are reinvested in the business to drive growth.

Earnings per share are expected to grow by 27.7% next year. Assuming the dividend continues to follow current trends, we believe the payout ratio could reach 54% next year, which is within a fairly stable range.

Hilton Food Group has a solid track record

The company has a long history of paying stable dividends. The annual payout over the last 10 years was £0.128 in 2014, and the last payout in the fiscal year was £0.32. This means that it has increased its payout by 9.6% per annum during this time. Dividends have grown at a reasonable rate over this period, and with no major cuts in the payout over time, we believe this is an attractive combination as it provides good growth in shareholder returns.

Hilton Food Group may increase its dividend

Some investors will be eager to buy shares based on their dividend history. Hilton Food Group has impressed us, growing its EPS by 6.7% per year over the past five years. Shareholders are getting a large portion of their earnings back, which, combined with the strong growth, makes this quite attractive.

We really like Hilton Food Group’s dividend

Generally speaking, dividend growth is always good and we think Hilton Food Group is a strong income stock thanks to its history and growing earnings. The company easily earns enough to cover its dividend payments and it’s great to see those earnings turning into cash flow. Considering all of these factors, we think it has solid potential as a dividend stock.

Market movements are a testament to how highly valued a consistent dividend policy is over one that is more unpredictable. At the same time, there are other factors that our readers should be aware of before investing capital in stocks. For example, we have selected 1 warning sign for Hilton Food Group that investors should be aware of before investing capital in these stocks. Looking for more high-yield dividend ideas? Try our a set of strong dividend payers.

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This Simply Wall St article is for general information purposes only. Our commentary is based solely on historical data and analyst forecasts, and is based on an objective methodology. Our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or your financial situation. Our goal is to provide you with long-term, focused analysis based on fundamental data. Please note that our analysis may not reflect the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.