Wynnstay Group Plc's (LON:WYN) investors are due to receive a payment of £0.056 per share on 31st of October. This will take the dividend yield to an attractive 5.3%, providing a nice boost to shareholder returns.
Check out our latest analysis for Wynnstay Group
Wynnstay Group's Future Dividend Projections Appear Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Wynnstay Group's earnings. This means that a large portion of its earnings are being retained to grow the business.
Looking forward, could fall by 6.5% if the company can't turn things around from the last few years. If recent patterns in the dividend continue, we could see the payout ratio reaching 77% in the next 12 months which is on the higher end of the range we would say is sustainable.
Wynnstay Group Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from £0.093 total annually to £0.174. This implies that the company grew its distributions at a yearly rate of about 6.4% over that duration. 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.
Dividend Growth May Be Hard To Come By
Investors could be attracted to the stock based on the quality of its payment history. However, initial appearances might be deceiving. In the last five years, Wynnstay Group's earnings per share has shrunk at approximately 6.5% per annum. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.
Our Thoughts On Wynnstay Group's Dividend
Overall, this is a reasonable dividend, and it being raised is an added bonus. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.
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. Taking the debate a bit further, we've identified 3 warning signs for Wynnstay Group that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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