Lords Group Trading's (LON:LORD) Dividend Will Be £0.0067

The board of Lords Group Trading plc (LON:LORD) has announced that it will pay a dividend on the 6th of October, with investors receiving £0.0067 per share. This means the annual payment is 3.3% of the current stock price, which is above the average for the industry.

See our latest analysis for Lords Group Trading

Lords Group Trading's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. However, based ont he last payment, Lords Group Trading was earning enough to cover the dividend pretty comfortably. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.

The next year is set to see EPS grow by 31.0%. 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.

Lords Group Trading Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The dividend has gone from an annual total of £0.0126 in 2021 to the most recent total annual payment of £0.02. This works out to be a compound annual growth rate (CAGR) of approximately 26% a year over that time. 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

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Lords Group Trading has seen EPS rising for the last five years, at 36% per annum. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Our Thoughts On Lords Group Trading's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Lords Group Trading's payments, as there could be some issues with sustaining them into the future. While Lords Group Trading is earning enough to cover the dividend, we are generally unimpressed with its future prospects. We don't think Lords Group Trading is a great stock to add to your portfolio if income is your focus.

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. As an example, we've identified 2 warning signs for Lords Group Trading that you should be aware of before investing. Is Lords Group Trading 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.