NEW YORK - Xylem Inc (NYSE:XYL)., a leading global water technology company, has announced that its next dividend payment of $0.33 per share will be distributed on December 19th. Investors looking to benefit from this payout must purchase shares before the ex-dividend date of November 20th, which is the cutoff for eligibility. The upcoming dividend contributes to an annual total of $1.32 per share, yielding around 1.3% based on Xylem's current share price of $101.2.
The company's approach to dividends aligns with common business practices, as it returned 53% of its earnings and 54% of its free cash flow to shareholders last year. This level of distribution suggests that the dividend is maintainable barring a notable decline in profits.
In reviewing Xylem's financial growth, the company's earnings per share (EPS) have seen an average increase of 2.1% over the past five years. Although this growth rate is considered modest, it has not hindered the company from enhancing shareholder value through consistent dividend increases. In fact, over the last decade, Xylem has consistently raised its dividend by an average of 11% annually.
However, investors are advised to look beyond the dividend yield and consider various factors before making investment decisions. These include assessing Xylem's future dividend projections by analysts, understanding the company's growth prospects, and recognizing the significance of cash flows when evaluating a dividend's sustainability. Additionally, they should be mindful of the potential impact that a high payout ratio could have on the company's capacity for future growth.
As with any investment decision, investors are encouraged to avoid common pitfalls such as selecting stocks based solely on initial appeal and should instead consider a broader spectrum of high-yield dividend stocks for their portfolios.
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