Heidrick & Struggles International (NASDAQ:HSII) Is Paying Out A Dividend Of $0.15
The board of Heidrick & Struggles International, Inc. (NASDAQ:HSII) has announced that it will pay a dividend of $0.15 per share on the 21st of March. This means the dividend yield will be fairly typical at 1.8%.
Check out our latest analysis for Heidrick & Struggles International
Heidrick & Struggles International's Earnings Easily Cover The Distributions
We aren't too impressed by dividend yields unless they can be sustained over time. Heidrick & Struggles International is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.
Over the next year, EPS is forecast to expand by 13.9%. Assuming the dividend continues along recent trends, we think the payout ratio could be 20% by next year, which is in a pretty sustainable range.
Heidrick & Struggles International Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was $0.52, compared to the most recent full-year payment of $0.60. This implies that the company grew its distributions at a yearly rate of about 1.4% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Heidrick & Struggles International May Find It Hard To Grow The Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Heidrick & Struggles International's EPS was effectively flat over the past five years, which could stop the company from paying more every year. Earnings growth is slow, but on the plus side, the dividend payout ratio is low and dividends could grow faster than earnings, if the company decides to increase its payout ratio.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Heidrick & Struggles International's payments, as there could be some issues with sustaining them into the future. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think Heidrick & Struggles International is a great stock to add to your portfolio if income is your focus.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Heidrick & Struggles International that investors need to be conscious of moving forward. 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.
