Sleep Country (TSX:ZZZ) Canada Holdings Inc. (TSE:ZZZ) is set to increase its dividend to CA$0.237 on November 30th, reflecting a yield of 4.0% and marking a notable enhancement to shareholder returns. The bedding retailer's robust earnings, primarily reinvested to fuel business expansion, comfortably cover the upcoming dividend payment. With the expectation that earnings per share (EPS) will climb by 9.4% in the next year, the company anticipates a sustainable payout ratio of 35%.
Despite a history that includes at least one dividend cut, Sleep Country has shown commendable growth in its annual total dividend, rising from CA$0.52 in 2015 to the current CA$0.948 (USD1 = CAD1.3703). This progression translates to an average yearly increase of 7.8%. Nevertheless, investors are advised to exercise caution due to past reductions when considering the company's dividend track record.
The firm's consistent annual EPS growth rate of 9.4% over the past five years stands as a strong signal for the future sustainability of its dividends, particularly given Sleep Country's low payout ratio. These elements position the company as an attractive option for income-focused investors.
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