Stingray Group's (TSE:RAY.A) Dividend Will Be CA$0.075

The board of Stingray Group Inc. (TSE:RAY.A) has announced that it will pay a dividend of CA$0.075 per share on the 14th of June. The dividend yield will be 4.2% based on this payment which is still above the industry average.

View our latest analysis for Stingray Group

Stingray Group's Earnings Easily Cover The Distributions

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Stingray Group's dividend was comfortably covered by both cash flow and earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to rise by 90.4% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 28% by next year, which is in a pretty sustainable range.

Stingray Group Doesn't Have A Long Payment History

Stingray Group'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 CA$0.12 in 2015 to the most recent total annual payment of CA$0.30. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Stingray Group has been growing its earnings per share at 36% a year over the past five years. The company's earnings per share has grown rapidly in recent years, and it has a good balance between reinvesting and paying dividends to shareholders, so we think that Stingray Group could prove to be a strong dividend payer.

We Really Like Stingray Group's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Stingray Group that investors should take into consideration. 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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