There's A Lot To Like About Shaver Shop Group's (ASX:SSG) Upcoming AU$0.05 Dividend

By
Simply Wall St
Published
September 03, 2021
ASX:SSG
Source: Shutterstock

Shaver Shop Group Limited (ASX:SSG) is about to trade ex-dividend in the next four 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. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Meaning, you will need to purchase Shaver Shop Group's shares before the 8th of September to receive the dividend, which will be paid on the 23rd of September.

The company's next dividend payment will be AU$0.05 per share. Last year, in total, the company distributed AU$0.10 to shareholders. Based on the last year's worth of payments, Shaver Shop Group has a trailing yield of 9.3% on the current stock price of A$1.08. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Shaver Shop Group has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for Shaver Shop Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Shaver Shop Group paid out 58% of its earnings to investors last year, a normal payout level for most businesses. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. What's good is that dividends were well covered by free cash flow, with the company paying out 21% 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 the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
ASX:SSG Historic Dividend September 3rd 2021

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 earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Shaver Shop Group's earnings have been skyrocketing, up 25% per annum for the past five years. The current payout ratio suggests a good balance between rewarding shareholders with dividends, and reinvesting in growth. With a reasonable payout ratio, profits being reinvested, and some earnings growth, Shaver Shop Group could have strong prospects for future increases to the dividend.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last five years, Shaver Shop Group has lifted its dividend by approximately 26% a year on average. It's great to see earnings per share growing rapidly over several years, and dividends per share growing right along with it.

To Sum It Up

From a dividend perspective, should investors buy or avoid Shaver Shop Group? Shaver Shop Group'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. There's a lot to like about Shaver Shop Group, and we would prioritise taking a closer look at it.

On that note, you'll want to research what risks Shaver Shop Group is facing. Case in point: We've spotted 1 warning sign for Shaver Shop Group you should be aware of.

If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.

If you decide to trade Shaver Shop Group, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.