Gamehost (TSE:GH) Is Increasing Its Dividend To CA$0.04
Gamehost Inc. (TSE:GH) has announced that it will be increasing its dividend from last year's comparable payment on the 15th of December to CA$0.04. This takes the dividend yield to 3.9%, which shareholders will be pleased with.
See our latest analysis for Gamehost
Gamehost's Dividend Is Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained. However, Gamehost's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
If the trend of the last few years continues, EPS will grow by 5.0% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio will be 33%, which is in the range that makes us comfortable with the sustainability of the dividend.
Dividend Volatility
The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was CA$0.88 in 2013, and the most recent fiscal year payment was CA$0.36. This works out to be a decline of approximately 8.5% per year over that time. A company that decreases its dividend over time generally isn't what we are looking for.
The Dividend Has Growth Potential
Given that the track record hasn't been stellar, we really want to see earnings per share growing over time. It's encouraging to see that Gamehost has been growing its earnings per share at 5.0% a year over the past five years. Gamehost definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Our Thoughts On Gamehost's Dividend
In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Gamehost (of which 1 can't be ignored!) you should know about. Is Gamehost 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.
