Gateley (Holdings) (LON:GTLY) Has Affirmed Its Dividend Of £0.062

Gateley (Holdings) Plc's (LON:GTLY) investors are due to receive a payment of £0.062 per share on 1st of January. The dividend yield will be 7.0% based on this payment which is still above the industry average.

View our latest analysis for Gateley (Holdings)

Gateley (Holdings)'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, the company was paying out 123% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

EPS is set to grow by 61.5% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 85%, which is on the higher side, but certainly still feasible.

Gateley (Holdings)'s Dividend Has Lacked Consistency

Looking back, Gateley (Holdings)'s dividend hasn't been particularly consistent. This makes us cautious about the consistency of the dividend over a full economic cycle. The dividend has gone from an annual total of £0.0379 in 2015 to the most recent total annual payment of £0.095. This implies that the company grew its distributions at a yearly rate of about 11% over that duration. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

Dividend Growth Is Doubtful

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Gateley (Holdings) has seen earnings per share falling at 8.6% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits. 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 can turn into a longer term trend.

Gateley (Holdings)'s Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Gateley (Holdings) make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. The dividend doesn't inspire confidence that it will provide solid income in the future.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 3 warning signs for Gateley (Holdings) you should be aware of, and 1 of them makes us a bit uncomfortable. Is Gateley (Holdings) not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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