Turning Point Brands (NYSE:TPB) Is Due To Pay A Dividend Of $0.065
Turning Point Brands, Inc. (NYSE:TPB) will pay a dividend of $0.065 on the 7th of July. The dividend yield is 1.1% based on this payment, which is a little bit low compared to the other companies in the industry.
See our latest analysis for Turning Point Brands
Turning Point Brands' Dividend Is Well Covered By Earnings
While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. The last dividend was quite easily covered by Turning Point Brands' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
The next year is set to see EPS grow by 70.5%. If the dividend continues on this path, the payout ratio could be 36% by next year, which we think can be pretty sustainable going forward.
Turning Point Brands Is Still Building Its Track Record
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 dividend has gone from an annual total of $0.16 in 2017 to the most recent total annual payment of $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.
Dividend Growth Potential Is Shaky
The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Turning Point Brands' EPS has fallen by approximately 16% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Turning Point Brands' payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for Turning Point Brands you should be aware of, and 1 of them is a bit concerning. Is Turning Point Brands 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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