Yahoo Finance American Software (NASDAQ:AMSW.A) Is Due To Pay A Dividend Of $0.11
The board of American Software, Inc. (NASDAQ:AMSW.A) has announced that it will pay a dividend on the 30th of August, with investors receiving $0.11 per share. The dividend yield will be 4.3% based on this payment which is still above the industry average.
Check out our latest analysis for American Software
American Software Is Paying Out More Than It Is Earning
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, the company's dividend was higher than its profits, and made up 78% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.
Looking forward, earnings per share is forecast to fall by 16.2% over the next year. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 168%, which is definitely a bit high to be sustainable going forward.
American Software Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was $0.40 in 2014, and the most recent fiscal year payment was $0.44. Dividend payments have grown at less than 1% a year over this period. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.
There Isn't Much Room To Grow The Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. American Software has seen EPS rising for the last five years, at 10.0% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.
Our Thoughts On American Software's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. This company is not in the top tier of income providing stocks.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, American Software has 3 warning signs (and 1 which is potentially serious) we think you should know about. Is American Software 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.
