Yahoo Finance Seven Group Holdings (ASX:SVW) Will Pay A Dividend Of A$0.23
Seven Group Holdings Limited (ASX:SVW) will pay a dividend of A$0.23 on the 5th of May. This payment means that the dividend yield will be 1.9%, which is around the industry average.
Check out our latest analysis for Seven Group Holdings
Seven Group Holdings' Distributions May Be Difficult To Sustain
Unless the payments are sustainable, the dividend yield doesn't mean too much. Based on the last payment, Seven Group Holdings' earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
Looking forward, earnings per share is forecast to rise by 5.6% over the next year. The company seems to be going down the right path, but it will take a little bit longer than a year to cross over into profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.
Seven Group Holdings Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of A$0.36 in 2013 to the most recent total annual payment of A$0.46. This means that it has been growing its distributions at 2.5% per annum over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Seven Group Holdings has been growing its earnings per share at 30% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Seven Group Holdings could prove to be a strong dividend payer.
Our Thoughts On Seven Group Holdings' Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Seven Group Holdings' payments, as there could be some issues with sustaining them into the future. While Seven Group Holdings is earning enough to cover the payments, the cash flows are lacking. We don't think Seven Group Holdings is a great stock to add to your portfolio if income is your focus.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Seven Group Holdings that investors need to be conscious of moving forward. Is Seven Group Holdings 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.
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