Yahoo Finance Turners Automotive Group (NZSE:TRA) Will Pay A Dividend Of NZ$0.0588
The board of Turners Automotive Group Limited (NZSE:TRA) has announced that it will pay a dividend on the 26th of January, with investors receiving NZ$0.0588 per share. This means that the annual payment will be 6.7% of the current stock price, which is in line with the average for the industry.
Check out our latest analysis for Turners Automotive Group
Turners Automotive Group's Payment Has Solid Earnings Coverage
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, Turners Automotive Group's earnings easily covered the dividend, but free cash flows were negative. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.
The next year is set to see EPS grow by 17.0%. Assuming the dividend continues along recent trends, we think the payout ratio could be 69% by next year, which is in a pretty sustainable range.
Turners Automotive Group's Dividend Has Lacked Consistency
Turners Automotive Group has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2013, the annual payment back then was NZ$0.05, compared to the most recent full-year payment of NZ$0.24. This means that it has been growing its distributions at 19% per annum over that time. It is great to see strong growth in the dividend payments, but cuts are concerning as it may indicate the payout policy is too ambitious.
The Dividend Has Growth Potential
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Turners Automotive Group has seen EPS rising for the last five years, at 7.3% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious.
Our Thoughts On Turners Automotive Group's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Turners Automotive Group is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Turners Automotive Group (1 doesn't sit too well with us!) that you should be aware of before investing. Is Turners Automotive Group 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.
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