The board of Regional Management Corp. (NYSE:RM) has announced that it will pay a dividend of $0.30 per share on the 11th of June. This makes the dividend yield 4.4%, which will augment investor returns quite nicely.
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Regional Management's Payment Could Potentially Have Solid Earnings Coverage
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, prior to this announcement, Regional Management's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
Looking forward, earnings per share is forecast to rise by 35.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 31%, which is in the range that makes us comfortable with the sustainability of the dividend.
См. наш последний анализ для Regional Management
Regional Management Is Still Building Its Track Record
Regional Management's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from an annual total of $0.80 in 2020 to the most recent total annual payment of $1.20. This works out to be a compound annual growth rate (CAGR) of approximately 8.4% a year over that time. The dividend has been growing at a reasonable rate, which we like. However, investors will probably want to see a longer track record before they consider Regional Management to be a consistent dividend paying stock.
Dividend Growth May Be Hard To Achieve
The company's investors will be pleased to have been receiving dividend income for some time. Earnings per share has been crawling upwards at 4.2% per year. While EPS growth is quite low, Regional Management has the option to increase the payout ratio to return more cash to shareholders.
Our Thoughts On Regional Management's Dividend
Overall, a consistent dividend is a good thing, and we think that Regional Management has the ability to continue this into the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Taking the debate a bit further, we've identified 1 warning sign for Regional Management that investors need to be conscious of moving forward. Is Regional Management not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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