Yahoo Finance Plato Income Maximiser's (ASX:PL8) Dividend Will Be A$0.0055
Plato Income Maximiser Limited (ASX:PL8) will pay a dividend of A$0.0055 on the 31st of May. This means the annual payment is 5.5% of the current stock price, which is above the average for the industry.
Check out our latest analysis for Plato Income Maximiser
Plato Income Maximiser Doesn't Earn Enough To Cover Its Payments
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, Plato Income Maximiser's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 135% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.
If the company can't turn things around, EPS could fall by 4.3% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 101%, which is definitely a bit high to be sustainable going forward.
Plato Income Maximiser's Dividend Has Lacked Consistency
It's comforting to see that Plato Income Maximiser has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 7 years was A$0.054 in 2017, and the most recent fiscal year payment was A$0.066. This works out to be a compound annual growth rate (CAGR) of approximately 2.9% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
Plato Income Maximiser May Find It Hard To Grow The Dividend
Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. It's not great to see that Plato Income Maximiser's earnings per share has fallen at approximately 4.3% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.
We should note that Plato Income Maximiser has issued stock equal to 18% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
The Dividend Could Prove To Be Unreliable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments are bit high to be considered sustainable, and the track record isn't the best. This company is not in the top tier of income providing stocks.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 4 warning signs for Plato Income Maximiser (1 can't be ignored!) that you should be aware of before investing. Is Plato Income Maximiser not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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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.
