Deluxe Corporation's (NYSE:DLX) investors are due to receive a payment of $0.30 per share on 3rd of March. This makes the dividend yield 6.4%, which will augment investor returns quite nicely.

See our latest analysis for Deluxe

Deluxe's Projected Earnings Seem Likely To Cover Future Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Based on the last payment, Deluxe's profits didn't cover the dividend, but the company was generating enough cash instead. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

EPS is set to grow by 22.0% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 83%, which is on the higher side, but certainly still feasible.

Deluxe Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The last annual payment of $1.20 was flat on the annual payment from10 years ago. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

Deluxe's Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that Deluxe has been growing its earnings per share at 52% a year over the past five years. EPS has been growing well, but Deluxe has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

Our Thoughts On Deluxe's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Deluxe (of which 1 can't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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