The advice of Raspadskaya public joint stock company (MCX: RASP) has announced that it will increase its dividend on January 1 to 23.00. This will bring the annual payout from 6.1% to 7.7% of the share price, which is higher than what most companies in the industry pay.
While the dividend yield is important for income investors, it is also important to take into account any significant change in the price of the shares, as this will generally outweigh any gains from distributions. Investors will be delighted to see that the Raspadskaya share price has risen 61% in the past 3 months, which is good for shareholders and may also explain lower dividend yield.
Check out our latest analysis for Raspadskaya
Raspadskaya pays more than she earns
While it’s great to have a strong dividend yield, we also need to determine if the payout is sustainable. Prior to this announcement, the company paid 103% of what it earned and 87% of cash flow. The company could focus more on returning liquidity to shareholders, but this could indicate that growth opportunities are scarce.
EPS is expected to increase 3.4% over the next year if recent trends continue. If the dividend continues at its recent price, the 12 month payout rate could be 7.426%, which is a bit high and could start to put pressure on the balance sheet.
While the company has been paying a dividend for a long time, it has reduced the dividend at least once in the past 10 years. The first annual payment in the past 10 years was US $ 0.31 in 2011, and the most recent year’s payment was US $ 0.31. Dividend payouts have increased by less than 1% per year during this period. The dividend has experienced some fluctuation in the past, so even though the dividend has been increased this year, we must remember that it has been reduced in the past.
Raspadskaya may struggle to increase dividend
With a relatively volatile dividend, it is even more important to assess whether earnings per share are increasing, which could indicate a growing dividend in the future. However, Raspadskaya has only grown its earnings per share by 3.4% per year over the past five years. The company pays out a large portion of its profits, even if it increases those profits quite slowly. Limited recent earnings growth and a high payout ratio prevent us from considering strong future dividend growth unless the company needs to have substantial pricing power or some form of advantage. competitive.
The dividend could prove to be unreliable
Overall, we still like to see the dividend go up, but we don’t think Raspadskaya will make a great income title. The track record is not great and the payouts are a bit high to be considered sustainable. This company is not in the top bracket of income-providing stocks.
Companies with a stable dividend policy are likely to benefit from greater investor interest than those with a more inconsistent approach. However, there are other things for investors to consider when analyzing the performance of stocks. As an example, we have identified 2 warning signs for Raspadskaya that you need to know before you invest. Looking for more high yield dividend ideas? Try our organized list of big dividend payers.
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