The board of Fox Corporation (NASDAQ:FOXA) has announced that it will pay a dividend on the 26th of March, with investors receiving $0.27 per share. Although the dividend is now higher, the yield is only 0.9%, which is below the industry average.

View our latest analysis for Fox

Fox's Projected Earnings Seem Likely To Cover Future Distributions

The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. Before making this announcement, Fox was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 7.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 13%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.

Fox Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. Since 2019, the annual payment back then was $0.46, compared to the most recent full-year payment of $0.54. This works out to be a compound annual growth rate (CAGR) of approximately 2.7% a year over that time. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Fox has grown earnings per share at 11% per year over the past five years. Fox definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Fox Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Fox is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Fox that you should be aware of before investing. Is Fox not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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