Science Applications International (NASDAQ:SAIC) will pay a dividend of $0.37

Science Applications International Corporation (NASDAQ:SAIC) is scheduled to pay a dividend of $0.37 on July 26th. This would mean the annual payout will be 1.2% of the current share price, lower than the industry average.

View our latest analysis for Science Applications International

Science Applications International Payments Provide Solid Benefit Coverage

While a higher yield would be nice, we also need to check whether higher dividend payments are sustainable, but Science Applications International’s profits are more than enough to cover its dividend, and as a result, the majority of its profits are reinvested in the business.

EPS is expected to decrease by 14.7% over the next 12 months. Assuming the dividend continues along recent trends, the dividend payout ratio could be 20%, which we believe is quite comfortable for the company and achievable on an earnings basis.

Science Applications International has a proven track record

The company has been paying dividends for many years and has been very stable, giving us confidence in future dividend potential. Dividends have increased from an annual total of $1.12 in 2014 to the most recent annual total of $1.48. This means that the company has increased its dividends at a rate of approximately 2.8% per year over this period. While a slow and steady dividend increase may not sound all that appealing, the dividend has been stable for 10 years, which we believe makes this a pretty attractive offer.

Dividends are likely to increase

Investors may be attracted to this stock based on the quality of the company’s payment history, and Science Applications International has impressed us by growing its EPS at 24% per year over the past five years. We think this is an ideal combination for a dividend stock, as earnings per share are growing at a steady clip and the dividend payout ratio is low, making it fairly easy to raise the dividend in the future.

Science Applications International’s dividends are really good

Overall, we like that the dividend is stable, and we think Science Applications International may even be able to increase it in the future. The company’s profits are more than enough to cover the dividend, and the company generates plenty of cash. However, earnings are expected to decline over the next year, which may impact dividend payments over the next 12 months, although the longer term outlook may not change. Overall, this checks off many of the boxes we look for when picking an income stock.

It is important to note that a company with a consistent dividend policy will likely gain more investor confidence than one with an erratic dividend policy. However, there are other things investors should consider when analyzing stock performance. Examples include companies that: 3 warning signs for Science Applications International There are two things you need to know, and two of them you cannot ignore. Is Science Applications International the opportunity you have been looking for? A selection of top dividend stocks.

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