Western Union's Dividend Will Be $0.235: A Closer Look

As an investor, you're always on the lookout for companies that offer a solid dividend payout. One such company that has caught your eye is Western Union (NYSE:WU), a global leader in money transfer services. Recently, the company announced that it will pay a dividend of $0.235 per share on the 31st of March. This dividend yield of 8.9% is quite attractive, especially when compared to the industry average. But before you dive in, let's take a closer look at Western Union's dividend history, growth rate, and payout ratio to determine if this is a sound investment.



Western Union's Dividend History and Growth Rate
Western Union has a solid track record of paying dividends, with a compound annual growth rate (CAGR) of approximately 6.5% over the last 10 years. The annual payment during the last 10 years was $0.50 in 2015, and the most recent fiscal year payment was $0.94. This steady growth in dividends is an attractive feature for investors seeking a reliable income stream.

Western Union's Dividend Payout Ratio
While Western Union's dividend growth rate is impressive, it's essential to consider the company's dividend payout ratio. The payout ratio is the percentage of earnings that the company pays out as dividends. A high payout ratio can indicate that the company is distributing a larger portion of its earnings to shareholders, which could potentially impact the company's long-term sustainability.

As of February 8, 2025, Western Union's dividend yield was 8.75%, compared to an average dividend yield of 1.59% for similar companies or competitors. This high payout ratio could put the dividend under pressure and force the company to reduce it in the future if it were to run into tough times.

EPS and Dividend Growth Trajectory
Western Union's EPS is set to fall by 28.3% over the next 12 months. If the dividend continues along recent trends, the payout ratio could be 50%, which is considered quite comfortable. However, if earnings continue to decline, the company may need to reduce the dividend payout to maintain a sustainable payout ratio.

Western Union's Dividend Compared to Peers
To better understand Western Union's dividend prospects, it's helpful to compare its dividend payout ratio and growth rate to those of its peers in the financial services sector. Some of Western Union's competitors and their respective dividend yields include:

* Global Payments (GPN) - 0.92%
* Fidelity National Information Services (FIS) - 1.73%
* Mastercard (MA) - 0.49%
* Visa (V) - 0.47%
* eBay (EBAY) - 1.59%
* Qiwi (QIWI.ME) - 0.00%

As you can see, Western Union's dividend yield is significantly higher than that of its peers, indicating that the company may be more focused on distributing cash to shareholders than reinvesting in the business.

In conclusion, Western Union's dividend history and growth rate are attractive features for investors seeking a reliable income stream. However, the company's high dividend payout ratio and projected decline in EPS could pose challenges to future dividend increases. Investors should monitor the company's earnings and cash flow performance to assess the sustainability of its dividend payout. By comparing Western Union's dividend payout ratio and growth rate to those of its peers, investors can gain a better understanding of the company's prospects for future dividend increases.