SpartanNash (NASDAQ:SPTN) Will Pay A Dividend Of $0.215
SpartanNash Company (NASDAQ:SPTN) has announced that it will pay a dividend of $0.215 per share on the 30th of June. This makes the dividend yield 3.8%, which will augment investor returns quite nicely.
Check out our latest analysis for SpartanNash
SpartanNash's Payment Has Solid Earnings Coverage
Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Prior to this announcement, SpartanNash's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 229% of cash flows. Paying out such a high proportion of cash flows certainly exposes the company to cutting the dividend if cash flows were to reduce.
Over the next year, EPS is forecast to expand by 156.5%. If the dividend continues along recent trends, we estimate the payout ratio will be 36%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.
SpartanNash Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.32 in 2013, and the most recent fiscal year payment was $0.86. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. Rapidly growing dividends for a long time is a very valuable feature for an income stock.
Dividend Growth Could Be Constrained
The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that SpartanNash has been growing its earnings per share at 40% a year over the past five years. However, SpartanNash isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.
Our Thoughts On SpartanNash's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. We don't think SpartanNash 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 3 warning signs for SpartanNash that investors should take into consideration. Is SpartanNash 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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