Spok Holdings (NASDAQ:SPOK) Will Pay A Dividend Of $0.3125
Spok Holdings, Inc. (NASDAQ:SPOK) has announced that it will pay a dividend of $0.3125 per share on the 29th of March. Based on this payment, the dividend yield on the company's stock will be 7.4%, which is an attractive boost to shareholder returns.
Check out our latest analysis for Spok Holdings
Spok Holdings Doesn't Earn Enough To Cover Its Payments
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, the company was paying out 159% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.
The next 12 months is set to see EPS grow by 7.9%. If the dividend continues on its recent course, the payout ratio in 12 months could be 161%, which is a bit high and could start applying pressure to the balance sheet.
Spok Holdings Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.50 in 2014 to the most recent total annual payment of $1.25. This means that it has been growing its distributions at 9.6% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
Spok Holdings' Dividend Might Lack Growth
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Spok Holdings has grown earnings per share at 26% per year over the past five years. Although earnings per share is up nicely Spok Holdings is paying out 159% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.
Spok Holdings' Dividend Doesn't Look Sustainable
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 Spok Holdings is a great stock to add to your portfolio if income is your focus.
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. To that end, Spok Holdings has 3 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.
