Smartgroup announces dividend payment: Shareholders should note the date

Investors of the Australian Smartgroup Corporation are expecting an upcoming dividend payment, with important dates to note. The ex-dividend date, when the stock trades without dividend entitlement, is imminent within the next three days. From September 6th, purchasers will miss out, with the payout occurring on September 23rd. The forthcoming dividend amounts to 0.175 AUD per share, with the company disbursing a total of 0.51 AUD per share over the past 12 months. This equates to a yield of 6.4% at the current share price of 8.01 AUD. For investors focusing on dividend income, assessing the sustainability of these payments is crucial. Hence, it is essential to evaluate both the distributions and the growth potential of the company. Dividends are typically paid from corporate profits. If a company distributes more than it earns, the risk of a dividend cut increases. Smartgroup’s payout ratio is at an acceptable 65% of earnings. The company has also allocated 83% of its free cash flow as dividends, indicating that the dividend is covered by the cash flow, which is positive but leaves little room for dividend increases unless the company grows. The fact that the dividend is covered by earnings and cash flow shows a certain level of sustainability, as long as earnings do not experience a severe decline. Another indicator of solid dividend stocks is steadily growing earnings per share. In Smartgroup’s case, these have increased by 2.1% annually over the past five years. A payout ratio of 65% might suggest that the company sees limited reinvestment opportunities. Despite moderate earnings growth, this is not an especially attractive combination. For many investors, the historical development of dividends is also important. Over the last ten years, Smartgroup has increased its dividend by an average of 24% per year. This is a positive sign for shareholders hoping for participation in the company's growth. Overall, Smartgroup appears stable but not exceptional. Interested investors should also consider potential risks. The company presents a warning signal that potential investors should examine closely.