Diales Group (LON:DIAL) Is Paying Out A Dividend Of £0.0075
Diales Group Plc's (LON:DIAL) investors are due to receive a payment of £0.0075 per share on 9th of April. This makes the dividend yield 6.8%, which will augment investor returns quite nicely.
Diales Group's Future Dividend Projections Appear Well Covered By Earnings
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, Diales Group's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 486% of cash flows. Paying out such a high proportion of cash flows can expose the business to needing to cut the dividend if the business runs into some challenges.
EPS is set to grow by 14.8% over the next year. If recent patterns in the dividend continues, the payout ratio in 12 months could be 78% which is a bit high but can definitely be sustainable.
See our latest analysis for Diales Group
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2016, the annual payment back then was £0.0165, compared to the most recent full-year payment of £0.015. Dividend payments have shrunk at a rate of less than 1% per annum over this time frame. A company that decreases its dividend over time generally isn't what we are looking for.
Dividend Growth May Be Hard To Come By
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. It's not great to see that Diales Group's earnings per share has fallen at approximately 7.5% per year over the past five years. If the company is making less over time, it naturally follows that it will also have to pay out less in dividends. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this can turn into a longer term trend.
Diales Group's Dividend Doesn't Look Sustainable
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Diales Group's payments, as there could be some issues with sustaining them into the future. The payments are bit high to be considered sustainable, and the track record isn't the best. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 4 warning signs for Diales Group that you should be aware of before investing. Is Diales Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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