Stingray Group (TSE:RAY.A) Has Announced A Dividend Of CA$0.075

Stingray Group Inc. (TSE:RAY.A) will pay a dividend of CA$0.075 on the 13th of June. This means that the annual payment will be 3.4% of the current stock price, which is in line with the average for the industry.

We've discovered 3 warning signs about Stingray Group. View them for free.

Stingray Group's Future Dividend Projections Seem Positive

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. While Stingray Group is not profitable, it is paying out less than 75% of its free cash flow, which means that there is plenty left over for reinvestment into the business. This gives us some comfort about the level of the dividend payments.

According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we think the payout ratio will be 11%, which makes us pretty comfortable with the sustainability of the dividend.

View our latest analysis for Stingray Group

Stingray Group Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The annual payment during the last 10 years was CA$0.12 in 2015, and the most recent fiscal year payment was CA$0.30. This means that it has been growing its distributions at 9.6% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Dividend Growth Potential Is Shaky

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Earnings per share has been sinking by 22% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Stingray Group's payments, as there could be some issues with sustaining them into the future. The company has been bring in plenty of cash to cover the dividend, but we don't necessarily think that makes it a great dividend stock. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. 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 picked out 3 warning signs for Stingray Group that investors should know about before committing capital to this stock. Is Stingray Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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