Dividend Investors: Don't Be Too Quick To Buy Pacific Current Group Limited (ASX:PAC) For Its Upcoming Dividend
Pacific Current Group Limited (ASX:PAC) is about to trade ex-dividend in the next 3 days. You can purchase shares before the 17th of September in order to receive the dividend, which the company will pay on the 23rd of October.
Pacific Current Group's next dividend payment will be AU$0.25 per share. Last year, in total, the company distributed AU$0.35 to shareholders. Last year's total dividend payments show that Pacific Current Group has a trailing yield of 5.8% on the current share price of A$6. If you buy this business for its dividend, you should have an idea of whether Pacific Current Group's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Pacific Current Group
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. Pacific Current Group lost money last year, so the fact that it's paying a dividend is certainly disconcerting. There might be a good reason for this, but we'd want to look into it further before getting comfortable.
Click here to see how much of its profit Pacific Current Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Pacific Current Group was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Pacific Current Group has delivered an average of 4.8% per year annual increase in its dividend, based on the past 10 years of dividend payments.
We update our analysis on Pacific Current Group every 24 hours, so you can always get the latest insights on its financial health, here.
The Bottom Line
Is Pacific Current Group an attractive dividend stock, or better left on the shelf? It's definitely not great to see that it paid a dividend despite reporting a loss last year. Worse, the general trend in its earnings looks negative in recent times. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
So if you're still interested in Pacific Current Group despite it's poor dividend qualities, you should be well informed on some of the risks facing this stock. To help with this, we've discovered 2 warning signs for Pacific Current Group that you should be aware of before investing in their shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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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