Stock Analysis

Genus' (LON:GNS) Dividend Will Be £0.217

  •  Updated
LSE:GNS
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The board of Genus plc (LON:GNS) has announced that it will pay a dividend on the 9th of December, with investors receiving £0.217 per share. This means the annual payment will be 1.1% of the current stock price, which is lower than the industry average.

See our latest analysis for Genus

Genus' Earnings Easily Cover The Distributions

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, Genus' earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Looking forward, earnings per share is forecast to rise by 70.2% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 32% by next year, which is in a pretty sustainable range.

historic-dividend
LSE:GNS Historic Dividend September 11th 2022

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. The dividend has gone from an annual total of £0.133 in 2012 to the most recent total annual payment of £0.32. This implies that the company grew its distributions at a yearly rate of about 9.2% over that duration. 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.

The Dividend's Growth Prospects Are Limited

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. However, Genus has only grown its earnings per share at 3.1% per annum over the past five years. Growth of 3.1% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This could mean the dividend doesn't have the growth potential we look for going into the future.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Genus is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Earnings growth generally bodes well for the future value of company dividend payments. See if the 4 Genus analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Is Genus not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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About LSE:GNS

Genus

Genus plc operates as an animal genetics company in North America, Latin America, the United Kingdom, rest of Europe, the Middle East, Russia, Africa, and Asia.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth3
Past Performance2
Financial Health4
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Adequate balance sheet with moderate growth potential.