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Western Union (NYSE:WU) Has Affirmed Its Dividend Of $0.235

Simply Wall St · 05/28 10:19

The Western Union Company (NYSE:WU) will pay a dividend of $0.235 on the 30th of June. The dividend yield will be 9.9% based on this payment which is still above the industry average.

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Western Union's Projected Earnings Seem Likely To Cover Future Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. However, based ont he last payment, Western Union was earning enough to cover the dividend pretty comfortably. The business is earning enough to make the dividend feasible, but the cash payout ratio of 91% shows that most of the cash is going back to the shareholders, which could constrain growth prospects going forward.

Over the next year, EPS is forecast to fall by 30.2%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 52%, which is comfortable for the company to continue in the future.

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NYSE:WU Historic Dividend May 28th 2025

See our latest analysis for Western Union

Western Union Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2015, the dividend has gone from $0.50 total annually to $0.94. This works out to be a compound annual growth rate (CAGR) of approximately 6.5% a year over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Western Union May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. However, Western Union's EPS was effectively flat over the past five years, which could stop the company from paying more every year. While EPS growth is quite low, Western Union has the option to increase the payout ratio to return more cash to shareholders.

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Our Thoughts On Western Union's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Western Union's payments, as there could be some issues with sustaining them into the future. While Western Union is earning enough to cover the dividend, we are generally unimpressed with its future prospects. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 4 warning signs for Western Union (3 shouldn't be ignored!) that you should be aware of before investing. Is Western Union not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.