Shaver Shop Group Limited (ASX:SSG) Pays A AU$0.055 Dividend In Just Three Days
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Shaver Shop Group Limited (ASX:SSG) is about to trade ex-dividend in the next 3 days. Typically, the ex-dividend date is two business days before the record date, which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is important as the process of settlement involves at least two full business days. So if you miss that date, you would not show up on the company's books on the record date. Accordingly, Shaver Shop Group investors that purchase the stock on or after the 2nd of September will not receive the dividend, which will be paid on the 17th of September.
The company's next dividend payment will be AU$0.055 per share, and in the last 12 months, the company paid a total of AU$0.10 per share. Last year's total dividend payments show that Shaver Shop Group has a trailing yield of 7.3% on the current share price of AU$1.41. If you buy this business for its dividend, you should have an idea of whether Shaver Shop Group's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 47% of its free cash flow as dividends, a comfortable payout level for most companies.
See our latest analysis for Shaver Shop Group
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. So we're not too excited that Shaver Shop Group's earnings are down 4.4% a year over the past five years.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Shaver Shop Group has delivered an average of 12% per year annual increase in its dividend, based on the past 10 years of dividend payments.
The Bottom Line
Has Shaver Shop Group got what it takes to maintain its dividend payments? Earnings per share are down meaningfully, although at least the company is paying out a low and conservative percentage of both its earnings and cash flow. It's definitely not great to see earnings falling, but at least there may be some buffer before the dividend needs to be cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy Shaver Shop Group today.
In light of that, while Shaver Shop Group has an appealing dividend, it's worth knowing the risks involved with this stock. Our analysis shows 1 warning sign for Shaver Shop Group and you should be aware of it before buying any shares.
Generally, we wouldn't recommend just buying the first dividend stock you see. Here's a curated list of interesting stocks that are strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.