AudioCodes (NASDAQ:AUDC) Has Affirmed Its Dividend Of $0.18
The board of AudioCodes Ltd. (NASDAQ:AUDC) has announced that it will pay a dividend on the 31st of August, with investors receiving $0.18 per share. This means the dividend yield will be fairly typical at 3.2%.
View our latest analysis for AudioCodes
AudioCodes' Earnings Easily Cover The Distributions
We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Prior to this announcement, the company was paying out 125% of what it was earning. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.
The next year is set to see EPS grow by 34.2%. Assuming the dividend continues along the course it has been charting recently, our estimates show the payout ratio being 68% which brings it into quite a comfortable range.
AudioCodes Doesn't Have A Long Payment History
AudioCodes' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.20 in 2018 to the most recent total annual payment of $0.36. This implies that the company grew its distributions at a yearly rate of about 12% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
AudioCodes' Dividend Might Lack Growth
Investors could be attracted to the stock based on the quality of its payment history. AudioCodes has seen EPS rising for the last five years, at 14% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.
AudioCodes' Dividend Doesn't Look Sustainable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We would be a touch cautious of relying on this stock primarily for the dividend income.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, AudioCodes has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
