Aspen Group Ltd. (TLV:ASGR) Passed Our Checks, And It's About To Pay A ₪0.067 Dividend

Aspen Group Ltd. (TLV:ASGR) is about to trade ex-dividend in the next 3 days. Investors can purchase shares before the 8th of December in order to be eligible for this dividend, which will be paid on the 31st of December.

Aspen Group's next dividend payment will be ₪0.067 per share. Last year, in total, the company distributed ₪0.27 to shareholders. Last year's total dividend payments show that Aspen Group has a trailing yield of 4.3% on the current share price of ₪6.217. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Aspen Group has been able to grow its dividends, or if the dividend might be cut.

See our latest analysis for Aspen Group

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Aspen Group is paying out just 16% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It distributed 27% of its free cash flow as dividends, a comfortable payout level for most companies.

It's positive to see that Aspen Group's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.

Click here to see how much of its profit Aspen Group paid out over the last 12 months.

Have Earnings And Dividends Been Growing?

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That's why it's comforting to see Aspen Group's earnings have been skyrocketing, up 26% per annum for the past five years. Aspen Group is paying out less than half its earnings and cash flow, while simultaneously growing earnings per share at a rapid clip. This is a very favourable combination that can often lead to the dividend multiplying over the long term, if earnings grow and the company pays out a higher percentage of its earnings.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Aspen Group has delivered 2.5% dividend growth per year on average over the past 10 years. It's good to see both earnings and the dividend have improved - although the former has been rising much quicker than the latter, possibly due to the company reinvesting more of its profits in growth.

Final Takeaway

Should investors buy Aspen Group for the upcoming dividend? Aspen Group has grown its earnings per share while simultaneously reinvesting in the business. Unfortunately it's cut the dividend at least once in the past 10 years, but the conservative payout ratio makes the current dividend look sustainable. It's a promising combination that should mark this company worthy of closer attention.

In light of that, while Aspen Group has an appealing dividend, it's worth knowing the risks involved with this stock. For example, we've found 3 warning signs for Aspen Group (1 is a bit concerning!) that deserve your attention before investing in the shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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