Stock Analysis

Quixant (LON:QXT) Has Announced That It Will Be Increasing Its Dividend To $0.03

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The board of Quixant Plc (LON:QXT) has announced that it will be paying its dividend of $0.03 on the 25th of August, an increased payment from last year's comparable dividend. Based on this payment, the dividend yield for the company will be 1.6%, which is fairly typical for the industry.

Check out our latest analysis for Quixant

Quixant's Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Based on the last payment, Quixant was earning enough to cover the dividend, but free cash flows weren't positive. With the company not bringing in any cash, paying out to shareholders is bound to become difficult at some point.

Over the next year, EPS is forecast to fall by 16.6%. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 23%, which is comfortable for the company to continue in the future.

AIM:QXT Historic Dividend March 24th 2023

Quixant's Dividend Has Lacked Consistency

It's comforting to see that Quixant has been paying a dividend for a number of years now, however it has been cut at least once in that time. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 9 years was $0.0165 in 2014, and the most recent fiscal year payment was $0.0367. This works out to be a compound annual growth rate (CAGR) of approximately 9.3% a year over that time. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we're not certain this dividend stock would be ideal for someone intending to live on the income.

Quixant May Find It Hard To Grow The Dividend

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Quixant has seen earnings per share falling at 3.7% per year over the last five years. Declining earnings will inevitably lead to the company paying a lower dividend in line with lower profits.

Quixant's Dividend Doesn't Look Sustainable

Overall, we always like to see the dividend being raised, but we don't think Quixant will make a great income stock. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Quixant that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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