The board of PayPoint plc (LON:PAY) has announced that it will be increasing its dividend on the 7th of March to UK£0.085. This makes the dividend yield 5.1%, which is above the industry average.
View our latest analysis for PayPoint
PayPoint’s Dividend Is Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, the dividend made up 95% of cash flows, but a higher proportion of net income. The company could be more focused on returning cash to shareholders, but this could indicate that growth opportunities are few and far between.
Looking forward, earnings per share is forecast to rise by 53.7% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 66% which would be quite comfortable going to take the dividend forward.
Dividend Volatility
Although the company has a long dividend history, it has been cut at least once in the last…