Nine Entertainment Co. Holdings Limited (ASX: NEC) announced that on April 24, he will pay a dividend of $ 0.035, which reduces the comparable dividend from last year. Despite the decline, the 5.2% dividend yield will always be comparable to other industry companies.
Although dividend yield is important for income investors, it is also important to consider the significant movements of the equity prices, as this will generally prevail over distribution gains. Investors will be happy to see that the course of the action of nine entertainment has increased by 31% in the last 3 months, which is good for shareholders and can also explain a decrease in dividend yield.
See our latest analysis for nine holdings Entertainment
We like to see a yield in healthy dividends, but that is only useful to us if payment can continue. Before this announcement, the company paid 140% of what it earned and 76% of cash flows. Although the cash payment ratio is not necessarily a source of concern, the company probably focuses more on the return in cash to shareholders than on the growth of the company.
During the next year, the EPS is expected to extend from 139.3%. Assuming that the dividend will continue along recent trends, we believe that the payment ratio could be 59%, which would be quite comfortable to move the dividend.
The history of company dividends has been marked by instability, with at least one reduction in the past 10 years. Since 2015, annual payment at the time was $ 0.042, compared to the more recent year payment of $ 0.085. This works to be an annual growth rate (TCAC) of around 7.3% per year during this period. A reasonable rate of dividend growth is good to see, but we are bent that the history of dividends is not as solid as we want, having been cut at least once.
The growing benefit by action could be an attenuating factor when considering the past fluctuations of the dividend. Nine Entertainment Holdings has seen the benefit by action fall to 4.5% per year in the past five years. The drop in profits will inevitably lead to that the company will pay a lower dividend in accordance with lower profits. Revenues should grow over the next 12 months and if this happens, we could still be a little careful until it becomes a diagram.
Overall, it is not great to see that the dividend has been cut, but it could be explained by the payments a little high before. Payments are a little high to be considered durable, and the history is not the best. We would be careful to count on this stock mainly for dividend income.