Natural Grocers by Vitamin Cottage (NYSE:NGVC) Is Paying Out A Dividend Of $0.10
Natural Grocers by Vitamin Cottage, Inc. (NYSE:NGVC) will pay a dividend of $0.10 on the 20th of March. The dividend yield will be 2.3% based on this payment which is still above the industry average.
Check out our latest analysis for Natural Grocers by Vitamin Cottage
Natural Grocers by Vitamin Cottage Is Paying Out More Than It Is Earning
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. However, prior to this announcement, Natural Grocers by Vitamin Cottage's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
EPS is set to grow by 22.0% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 121%, which is a bit high and could start applying pressure to the balance sheet.
Natural Grocers by Vitamin Cottage Doesn't Have A Long Payment History
The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of $0.28 in 2020 to the most recent total annual payment of $0.40. This means that it has been growing its distributions at 9.3% per annum over that time. The dividend has been growing as a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Natural Grocers by Vitamin Cottage to be a consistent dividend paying stock.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. Natural Grocers by Vitamin Cottage has impressed us by growing EPS at 22% per year over the past five years. A low payout ratio gives the company a lot of flexibility, and growing earnings also make it very easy for it to grow the dividend.
We Really Like Natural Grocers by Vitamin Cottage's Dividend
Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. All of these factors considered, we think this has solid potential as a dividend stock.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 2 warning signs for Natural Grocers by Vitamin Cottage that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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