APM Human Services International (ASX:APM) Is Paying Out A Dividend Of A$0.05

APM Human Services International Limited (ASX:APM) has announced that it will pay a dividend of A$0.05 per share on the 28th of September. This makes the dividend yield 5.3%, which will augment investor returns quite nicely.

Check out our latest analysis for APM Human Services International

APM Human Services International's Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before this announcement, APM Human Services International was paying out 85% of earnings, but a comparatively small 58% of free cash flows. This leaves plenty of cash for reinvestment into the business.

Looking forward, earnings per share is forecast to rise by 69.6% over the next year. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 50% which would be quite comfortable going to take the dividend forward.

APM Human Services International Doesn't Have A Long Payment History

It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

APM Human Services International Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. APM Human Services International has impressed us by growing EPS at 78% per year over the past three years. Fast growing earnings are great, but this can rarely be sustained without some reinvestment into the business, which APM Human Services International hasn't been doing.

Our Thoughts On APM Human Services International'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. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 2 warning signs for APM Human Services International that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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