Via Renewables (NASDAQ:VIA) Will Pay A Dividend Of $0.1813
The board of Via Renewables, Inc. (NASDAQ:VIA) has announced that it will pay a dividend on the 15th of September, with investors receiving $0.1813 per share. Based on this payment, the dividend yield on the company's stock will be 9.7%, which is an attractive boost to shareholder returns.
Check out our latest analysis for Via Renewables
Via Renewables' Dividend Is Well Covered By Earnings
A big dividend yield for a few years doesn't mean much if it can't be sustained. Via Renewables was earning enough to cover the previous dividend, but it was paying out quite a large proportion of its free cash flows. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.
Looking forward, earnings per share could rise by 3.5% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 61%, which is in the range that makes us comfortable with the sustainability of the dividend.
Via Renewables Doesn't Have A Long Payment History
It is great to see that Via Renewables 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 $0.481 in 2014 to the most recent total annual payment of $0.725. This means that it has been growing its distributions at 5.3% per annum over that time. Via Renewables has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings have grown at around 3.5% a year for the past five years, which isn't massive but still better than seeing them shrink. Via Renewables is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.
Our Thoughts On Via Renewables' Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Via Renewables is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Via Renewables 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Via Renewables that you should be aware of before investing. 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.
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