Computershare Limited (ASX:CPU) recently declared a dividend of $0.40 per share, scheduled to be paid on March 20th. While this may seem appealing to investors, it is important to analyze the sustainability of such payments.
In the past, Computershare’s dividend payments have accounted for 85% of its earnings, leaving investors concerned about the long-term feasibility. However, the company’s cash flows have been significantly higher than its payments, indicating sufficient funds for reinvestment in its business operations.
Although Computershare’s dividend yield of 4.7% surpasses industry standards, its potential for future growth may be limited. Over the past five years, the company’s earnings per share have remained stagnant, leading to speculations that dividend growth might slow down. Additionally, with a payout ratio of 74%, it is uncertain if the company will continue to increase its dividends at the current pace.
Despite these potential challenges, Computershare has a solid track record of stable dividend payments. The annual dividend has grown at an impressive compound annual growth rate of 12% since 2014, without experiencing significant declines.
Investors should weigh the reliability of Computershare’s dividend against its stagnant earnings growth. While the company has sufficient cash flow to support its current payout, the lack of substantial growth in earnings may limit its ability to increase dividends in the future.
Considering the value placed by the market on consistent dividend policies, it is important to carefully evaluate Computershare’s prospects as an income stock. It is advisable for investors to conduct thorough analysis and assess whether the company aligns with their investment objectives.
As it stands, Computershare’s dividend payments may not be as rock solid as they initially seem. Investors should pay close attention to the company’s future earnings growth and evaluate whether this aligns with their dividend expectations.
FAQ Section:
Q: What dividend has Computershare recently declared?
A: Computershare has recently declared a dividend of $0.40 per share.
Q: When is the dividend scheduled to be paid?
A: The dividend is scheduled to be paid on March 20th.
Q: Are investors concerned about the sustainability of Computershare’s dividend payments?
A: Yes, investors are concerned about the long-term feasibility of the dividend payments.
Q: What percentage of Computershare’s earnings have dividend payments accounted for in the past?
A: Dividend payments have accounted for 85% of Computershare’s earnings in the past.
Q: Has Computershare’s cash flows been higher than its dividend payments?
A: Yes, Computershare’s cash flows have been significantly higher than its dividend payments.
Q: What is Computershare’s dividend yield?
A: Computershare’s dividend yield is 4.7%, which surpasses industry standards.
Q: What has the company’s earnings per share been like over the past five years?
A: Computershare’s earnings per share have remained stagnant over the past five years.
Q: What is the payout ratio for Computershare’s dividends?
A: The payout ratio for Computershare’s dividends is 74%.
Q: What has been the compound annual growth rate of Computershare’s annual dividend since 2014?
A: Computershare’s annual dividend has grown at a compound annual growth rate of 12% since 2014.
Q: What should investors consider when evaluating Computershare’s dividend?
A: Investors should weigh the reliability of Computershare’s dividend against its stagnant earnings growth.
Q: What is important for investors to evaluate when considering Computershare as an income stock?
A: It is important for investors to carefully evaluate Computershare’s prospects and assess whether the company aligns with their investment objectives.
Definitions:
– Dividend: A dividend is a payment made by a corporation to its shareholders, usually in the form of cash or additional shares of stock.
– Cash flows: Cash flows refer to the movement of cash into or out of a business, representing the funds generated or used by the company in its operations.
– Dividend yield: Dividend yield is a financial ratio that indicates the annual dividend payment by a company relative to its stock price, expressed as a percentage.
– Earnings per share: Earnings per share is a measure of a company’s profitability calculated by dividing its net income by the number of outstanding shares of common stock.
– Payout ratio: Payout ratio is the proportion of earnings paid out to shareholders in the form of dividends, usually expressed as a percentage.
– Compound annual growth rate: Compound annual growth rate (CAGR) is the rate of return required for an investment to grow from its beginning balance to its ending balance, assuming all profits are reinvested.
Suggested Related Links:
– ComputerShare Official Website
– Top Dividend Stocks of 2017
The source of the article is from the blog scimag.news