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The board of Pollard Banknote Limited (TSE:PBL) has announced that it will pay a dividend of CA$0.05 per share on the 15th of April. This payment means the dividend yield will be 1.0%, which is below the average for the industry.
View our latest analysis for Pollard Banknote
Pollard Banknote's Payment Could Potentially Have Solid Earnings Coverage
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Pollard Banknote was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
The next year is set to see EPS grow by 27.4%. If the dividend continues on this path, the payout ratio could be 13% by next year, which we think can be pretty sustainable going forward.
Pollard Banknote Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. Since 2015, the dividend has gone from CA$0.12 total annually to CA$0.20. This works out to be a compound annual growth rate (CAGR) of approximately 5.2% a year over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.
Pollard Banknote Could Grow Its Dividend
The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that Pollard Banknote has grown earnings per share at 8.7% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Pollard Banknote's prospects of growing its dividend payments in the future.
Pollard Banknote Looks Like A Great Dividend Stock
Overall, we like to see the dividend staying consistent, and we think Pollard Banknote might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Pollard Banknote analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Pollard Banknote 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.