Bytes Technology Group (LON:BYIT) Will Pay A Larger Dividend Than Last Year At £0.024

The board of Bytes Technology Group plc (LON:BYIT) has announced that it will be paying its dividend of £0.024 on the 2nd of December, an increased payment from last year's comparable dividend. This makes the dividend yield 2.3%, which is above the industry average.

See our latest analysis for Bytes Technology Group

Bytes Technology Group's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite comfortably covered by Bytes Technology Group's earnings, but it was a bit tighter on the cash flow front. By paying out so much of its cash flows, this could indicate that the company has limited opportunities for investment and growth.

The next year is set to see EPS grow by 90.5%. If the dividend continues on this path, the payout ratio could be 44% by next year, which we think can be pretty sustainable going forward.

Bytes Technology Group Is Still Building Its Track Record

Without a track record of dividend payments, we can't make a judgement on how stable it has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Bytes Technology Group has seen EPS rising for the last three years, at 13% per annum. Since earnings per share is growing at an acceptable rate, and the payout policy is balanced, we think the company is positioning itself well to grow earnings and dividends in the future.

Our Thoughts On Bytes Technology Group's Dividend

In summary, while it's always good to see the dividend being raised, we don't think Bytes Technology Group's payments are rock solid. The company hasn't been paying a very consistent dividend over time, despite only paying out a small portion of earnings. We would be a touch cautious of relying on this stock primarily for the dividend income.

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. Taking the debate a bit further, we've identified 1 warning sign for Bytes Technology Group that investors need to be conscious of moving forward. Is Bytes Technology Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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