Ninety One Group (LON:N91) Has Announced A Dividend Of £0.064

Ninety One Group (LON:N91) will pay a dividend of £0.064 on the 8th of August. The dividend yield of 7.7% is still a nice boost to shareholder returns, despite the cut.

View our latest analysis for Ninety One Group

Ninety One Group's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last dividend was quite easily covered by Ninety One Group's earnings. This means that a large portion of its earnings are being retained to grow the business.

EPS is set to fall by 1.0% over the next 12 months. However, if the dividend continues along recent trends, we estimate the payout ratio could reach 77%, meaning that most of the company's earnings are being paid out to shareholders.

Ninety One Group Is Still Building Its Track Record

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of £0.118 in 2020 to the most recent total annual payment of £0.123. This implies that the company grew its distributions at a yearly rate of about 1.0% over that duration. Ninety One Group hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Ninety One Group May Find It Hard To Grow The Dividend

Investors could be attracted to the stock based on the quality of its payment history. Earnings per share has been crawling upwards at 3.8% per year. Ninety One Group is struggling to find viable investments, so it is returning more to shareholders. This could mean the dividend doesn't have the growth potential we look for going into the future.

Our Thoughts On Ninety One Group's Dividend

Even though the dividend was cut this year, we think Ninety One Group has the ability to make consistent payments in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Ninety One Group has 2 warning signs (and 1 which is concerning) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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