Tetra Tech (NASDAQ:TTEK) Is Paying Out A Dividend Of $0.065

The board of Tetra Tech, Inc. (NASDAQ:TTEK) has announced that it will pay a dividend on the 12th of December, with investors receiving $0.065 per share. Including this payment, the dividend yield on the stock will be 0.8%, which is a modest boost for shareholders' returns.

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Tetra Tech's Payment Could Potentially Have Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Tetra Tech's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

Looking forward, earnings per share is forecast to rise by 109.6% over the next year. If the dividend continues on this path, the payout ratio could be 15% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Tetra Tech

Tetra Tech 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 annual payment back then was $0.056, compared to the most recent full-year payment of $0.26. This means that it has been growing its distributions at 17% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

We Could See Tetra Tech's Dividend Growing

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Tetra Tech has impressed us by growing EPS at 8.2% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Tetra Tech's Dividend

Overall, we like to see the dividend staying consistent, and we think Tetra Tech might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Tetra Tech that you should be aware of before investing. Is Tetra Tech not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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