Spark New Zealand (NZSE:SPK) Has Affirmed Its Dividend Of NZ$0.1471
Spark New Zealand Limited's (NZSE:SPK) investors are due to receive a payment of NZ$0.1471 per share on 7th of October. Based on this payment, the dividend yield will be 5.0%, which is fairly typical for the industry.
Check out our latest analysis for Spark New Zealand
Spark New Zealand Is Paying Out More Than It Is Earning
Solid dividend yields are great, but they only really help us if the payment is sustainable. Prior to this announcement, the company was paying out 114% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.
Earnings per share is forecast to rise by 28.5% over the next year. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 107% over the next year.
Dividend Volatility
While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. The annual payment during the last 10 years was NZ$0.18 in 2012, and the most recent fiscal year payment was NZ$0.27. This works out to be a compound annual growth rate (CAGR) of approximately 4.1% a year over that time. The dividend has seen some fluctuations in the past, so even though the dividend was raised this year, we should remember that it has been cut in the past.
Dividend Growth May Be Hard To Achieve
With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Spark New Zealand hasn't seen much change in its earnings per share over the last five years.
We're Not Big Fans Of Spark New Zealand's Dividend
Overall, while some might be pleased that the dividend wasn't cut, we think this may help Spark New Zealand make more consistent payments in the future. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. We don't think that this is a great candidate to be an income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Spark New Zealand has 3 warning signs (and 1 which is significant) we think you should know about. Is Spark New Zealand 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.
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