PARKEN Sport & Entertainment (CPH:PARKEN) Is Paying Out A Dividend Of DKK10.00

PARKEN Sport & Entertainment A/S (CPH:PARKEN) has announced that it will pay a dividend of DKK10.00 per share on the 28th of April. The dividend yield will be 7.2% based on this payment which is still above the industry average.

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PARKEN Sport & Entertainment's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last dividend, PARKEN Sport & Entertainment is earning enough to cover the payment, but then it makes up 182% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Over the next year, EPS could expand by 34.4% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 35%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for PARKEN Sport & Entertainment

PARKEN Sport & Entertainment's Dividend Has Lacked Consistency

It's comforting to see that PARKEN Sport & Entertainment has been paying a dividend for a number of years now, however it has been cut at least once in that time. This makes us cautious about the consistency of the dividend over a full economic cycle. The most recent annual payment of DKK10.00 is about the same as the annual payment 8 years ago. 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.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. PARKEN Sport & Entertainment has seen EPS rising for the last five years, at 34% per annum. 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 PARKEN Sport & Entertainment could prove to be a strong dividend payer.

Our Thoughts On PARKEN Sport & Entertainment'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. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for PARKEN Sport & Entertainment (1 is a bit concerning!) that you should be aware of before investing. Is PARKEN Sport & Entertainment not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.