Yahoo Finance There's A Lot To Like About 4Sight Holdings' (JSE:4SI) Upcoming R00.025 Dividend
It looks like 4Sight Holdings Limited (JSE:4SI) is about to go ex-dividend in the next three days. Typically, the ex-dividend date is one business day before the record date which is the date on which a company determines the shareholders eligible to receive a dividend. The ex-dividend date is an important date to be aware of as any purchase of the stock made on or after this date might mean a late settlement that doesn't show on the record date. Therefore, if you purchase 4Sight Holdings' shares on or after the 19th of June, you won't be eligible to receive the dividend, when it is paid on the 24th of June.
The company's upcoming dividend is R00.025 a share, following on from the last 12 months, when the company distributed a total of R0.05 per share to shareholders. Based on the last year's worth of payments, 4Sight Holdings stock has a trailing yield of around 6.7% on the current share price of R00.75. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.
Check out our latest analysis for 4Sight Holdings
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Its dividend payout ratio is 83% of profit, which means the company is paying out a majority of its earnings. The relatively limited profit reinvestment could slow the rate of future earnings growth. It could become a concern if earnings started to decline. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. What's good is that dividends were well covered by free cash flow, with the company paying out 24% of its cash flow last year.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see how much of its profit 4Sight Holdings paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Stocks in companies that generate sustainable earnings growth often make the best dividend prospects, as it is easier to lift the dividend when earnings are rising. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. It's encouraging to see 4Sight Holdings has grown its earnings rapidly, up 61% a year for the past five years. The company is paying out more than three-quarters of its earnings, but it is also generating strong earnings growth.
Unfortunately 4Sight Holdings has only been paying a dividend for a year or so, so there's not much of a history to draw insight from.
To Sum It Up
Has 4Sight Holdings got what it takes to maintain its dividend payments? 4Sight Holdings's growing earnings per share and conservative payout ratios make for a decent combination. We also like that it paid out a lower percentage of its cash flow. It's a promising combination that should mark this company worthy of closer attention.
On that note, you'll want to research what risks 4Sight Holdings is facing. For instance, we've identified 3 warning signs for 4Sight Holdings (1 can't be ignored) you should be aware of.
A common investing mistake is buying the first interesting stock you see. Here you can find a full list of high-yield 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
