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Nine Entertainment Holdings (ASX:NEC) raises dividend to A$0.07

board of Nine Entertainment Co. Holdings Limited (ASX:NEC) said it will pay a dividend of A$0.07 on 20 October. That’s more than last year’s comparable dividend. That puts the dividend yield at 6.4%, roughly in line with the industry average.

Check out the latest analysis from Nine Entertainment Holdings.

Nine Entertainment Holdings dividend well covered by earnings

A stable dividend yield is great, but it only really helps us if the payouts are sustainable. Prior to this announcement, Nine Entertainment Holdings’ dividend was a sizable portion of earnings, but only 58% of his free cash flow. Dividends are nothing more than cash payments to shareholders, so we focus on cash dividend rates where we know we have enough left over to reinvest in the business.

EPS is expected to increase by 29.3% next year. If the dividend continues in line with recent trends, we expect a payout ratio of 63%. This is a satisfactory dividend sustainability despite current levels being very high.

past dividends

Nine Entertainment Holdings dividend lacks consistency

In retrospect, Nine Entertainment Holdings’ dividend isn’t very stable. Even if the company has cut once, I would definitely not object to the possibility of cutting in the future.Over the past eight years, annual payments have been AUD$0.042 in 2014, and in the most recent financial year he paid AUD$0.14. was a dollar. This means a compound annual growth rate (CAGR) of about 16% during that time. The dividend has increased rapidly during this time, but past cuts make it uncertain whether this stock will be a reliable source of income in the future.

Dividend growth may be hard to come by

With dividends relatively volatile, it’s even more important to see if earnings per share are increasing. It’s not great that his earnings per share at Nine Entertainment Holdings have been down about 6.5% annually over the past five years. A decline in earnings will inevitably lead to a reduction in dividends paid by the company to match the decline in profits. But it’s actually going to be on the upside next year and earnings are going to go up. Just wait until it becomes a pattern before getting too excited.

In summary

In summary, it’s always good to see dividends go up, but I don’t think Nine Entertainment Holdings’ payouts are stable. Payouts aren’t particularly stable and we don’t see huge growth potential, but with dividends well covered by cash flow, they could prove reliable in the short term. I’d be a little wary of relying on this stock primarily for its dividend income.

It is important to note that companies with consistent dividend policies generate greater investor confidence than companies with volatile policies. At the same time, there are other factors that readers should be aware of before investing in stocks. Taking the discussion further, One Warning Sign for Nine Entertainment Holdings Investors need to be mindful of moving forward. Isn’t Nine Entertainment Holdings the Opportunity You’ve Been Looking For? Selection of high dividend stocks.

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This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price sensitive company announcements or qualitative materials. Is not …

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