CDW Corporation (NASDAQ:CDW) will pay a dividend of $0.625 on the 11th of March. This means that the annual payment will be 1.3% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for CDW

CDW's Future Dividend Projections Appear Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, CDW was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

The next year is set to see EPS grow by 23.7%. Assuming the dividend continues along recent trends, we think the payout ratio could be 30% by next year, which is in a pretty sustainable range.

CDW Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the dividend has gone from $0.17 total annually to $2.50. This works out to be a compound annual growth rate (CAGR) of approximately 31% a year over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

We Could See CDW's Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that CDW has been growing its earnings per share at 9.8% a year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for CDW's prospects of growing its dividend payments in the future.

We Really Like CDW's Dividend

Overall, we like to see the dividend staying consistent, and we think CDW might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend 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. For example, we've picked out 1 warning sign for CDW that investors should know about before committing capital to this stock. Is CDW not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.