Turning Point Brands (NYSE:TPB) Is Paying Out A Dividend Of $0.07
Turning Point Brands, Inc. (NYSE:TPB) has announced that it will pay a dividend of $0.07 per share on the 12th of April. Including this payment, the dividend yield on the stock will be 1.0%, which is a modest boost for shareholders' returns.
See our latest analysis for Turning Point Brands
Turning Point Brands' Earnings Easily Cover The Distributions
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. Before making this announcement, Turning Point Brands was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.
Over the next year, EPS is forecast to expand by 14.5%. If the dividend continues on this path, the payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.
Turning Point Brands Doesn't Have A Long Payment History
It is great to see that Turning Point Brands has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 6 years was $0.16 in 2018, and the most recent fiscal year payment was $0.26. This implies that the company grew its distributions at a yearly rate of about 8.4% over that duration. 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 Turning Point Brands 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. We are encouraged to see that Turning Point Brands has grown earnings per share at 11% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
We Really Like Turning Point Brands' Dividend
In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 1 warning sign for Turning Point Brands that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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