Centaur Media's (LON:CAU) Shareholders Will Receive A Bigger Dividend Than Last Year

Centaur Media Plc's (LON:CAU) dividend will be increasing from last year's payment of the same period to £0.006 on 20th of October. The payment will take the dividend yield to 3.0%, which is in line with the average for the industry.

See our latest analysis for Centaur Media

Centaur Media Is Paying Out More Than It Is Earning

Unless the payments are sustainable, the dividend yield doesn't mean too much. The last dividend was quite easily covered by Centaur Media's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

The next 12 months is set to see EPS grow by 34.2%. If the dividend continues on its recent course, the payout ratio in 12 months could be 152%, which is a bit high and could start applying pressure to the balance sheet.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the dividend has gone from £0.0225 total annually to £0.012. The dividend has shrunk at around 6.1% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Centaur Media has seen EPS rising for the last five years, at 73% per annum. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

Centaur Media Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Centaur Media that you should be aware of before investing. Is Centaur Media 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.