Shaver Shop Group Limited (ASX: SSG) is set to trade ex-dividend within the next four days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. It is important to know the ex-dividend date because any transaction in the share must have been settled by the registration date at the latest. This means that you will have to buy shares of Shaver Shop Group by September 8 to receive the dividend, which will be paid on September 23.
The company’s next dividend payment will be A $ 0.05 per share. Last year, in total, the company distributed AU $ 0.10 to shareholders. Based on the value of last year’s payouts, Shaver Shop Group has a rolling 9.3% return on the current A $ 1.08 share price. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs is not going to kill our goose that lays the golden eggs! As a result, readers should always check to see if Shaver Shop Group has been able to increase its dividends or if the dividend could be reduced.
Check out our latest review for Shaver Shop Group
If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Shaver Shop Group paid 58% of its profits to investors last year, a normal payout level for most businesses. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. The good thing is that dividends were well covered by free cash flow, with the company paying out 21% of its cash flow last year.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Stocks of companies that generate sustainable earnings growth often offer the best dividend prospects because it’s easier to raise the dividend when earnings rise. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. That’s why it’s heartwarming to see Shaver Shop Group profits soar, rising 25% per year over the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends and reinvesting in growth. With a reasonable payout ratio, reinvested earnings and some earnings growth, Shaver Shop Group could have good prospects for future dividend increases.
Most investors will primarily assess a company’s dividend prospects by checking the historical rate of dividend growth. Over the past five years, Shaver Shop Group has increased its dividend by around 26% per year on average. It’s great to see earnings per share increasing rapidly over several years, and dividends per share increasing at the same time.
From a dividend perspective, should investors buy or avoid Shaver Shop Group? Shaver Shop Group’s growing earnings per share and conservative payout ratios are a decent combination. We also like the fact that it pays a lower percentage of its cash flow. There is a lot to love about Shaver Shop Group, and we would prioritize taking a closer look.
On that note, you’ll want to research the risks Shaver Shop Group faces. Concrete example: we have spotted 1 warning sign for Shaver Shop Group you must be aware.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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