360 Capital Group (ASX:TGP) Has Affirmed Its Dividend Of AU$0.015

By
Simply Wall St
Published
September 28, 2021
ASX:TGP
Source: Shutterstock

360 Capital Group Limited (ASX:TGP) has announced that it will pay a dividend of AU$0.015 per share on the 27th of October. This means the annual payment is 7.7% of the current stock price, which is above the average for the industry.

See our latest analysis for 360 Capital Group

360 Capital Group Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, the company's dividend was much higher than its earnings. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Looking forward, EPS could fall by 25.6% if the company can't turn things around from the last few years. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 303%, which could put the dividend under pressure if earnings don't start to improve.

historic-dividend
ASX:TGP Historic Dividend September 28th 2021

360 Capital Group's Dividend Has Lacked Consistency

Looking back, 360 Capital Group's dividend hasn't been particularly consistent. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The first annual payment during the last 9 years was AU$0.05 in 2012, and the most recent fiscal year payment was AU$0.06. This implies that the company grew its distributions at a yearly rate of about 2.0% over that duration. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

Dividend Growth Potential Is Shaky

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. 360 Capital Group's EPS has fallen by approximately 26% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

360 Capital Group's Dividend Doesn't Look Great

In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Considering all of these factors, we wouldn't rely on this dividend if we wanted to live on the income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 3 warning signs for 360 Capital Group (1 makes us a bit uncomfortable!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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