Supreme aims for solid dividend yield

Supreme investors can look forward to a dividend payment of £0.018 per share on January 10. Despite an increase, the dividend yield remains below the industry average at 2.7%. Even a lower yield can be attractive if it remains stable over the years. It is pleasing that Supreme's earnings easily cover the dividend payout, indicating that the company is using its income for further growth. However, earnings per share are expected to decrease by 9.3% in the coming year. If the dividend continues to follow the previous trend, experts anticipate a payout ratio of 18%, which can be considered satisfactory and appears promising based on earnings. Looking back, the dividend development has been unstable, as the total payout per year has increased from £0.022 to £0.047 since 2021 - an impressive growth of 29% annually. However, caution is advised given the fluctuations in the past. Nevertheless, Supreme has recorded an annual growth in earnings per share of 16% over the last five years. This growth rate, combined with a low payout ratio, suggests potential for higher dividend payouts in the future. Although earnings are expected to decline next year, this may influence the long-term outlook less than the short-term dividend payouts. Investors generally prefer companies with a consistent dividend policy. However, there are some warning signals with Supreme that should be considered to fully assess the attractiveness of this stock as a source of income.