South Port New Zealand (NZSE:SPN) Is Paying Out A Dividend Of NZ$0.0882

South Port New Zealand Limited's (NZSE:SPN) investors are due to receive a payment of NZ$0.0882 per share on 7th of March. This means the dividend yield will be fairly typical at 3.3%.

Check out our latest analysis for South Port New Zealand

South Port New Zealand's Dividend Is Well Covered By Earnings

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Before making this announcement, South Port New Zealand was earning enough to cover the dividend, but it wasn't generating any free cash flows. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

Looking forward, earnings per share could rise by 5.6% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 66% by next year, which we think can be pretty sustainable going forward.

South Port New Zealand Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of NZ$0.20 in 2013 to the most recent total annual payment of NZ$0.27. This implies that the company grew its distributions at a yearly rate of about 3.0% over that duration. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Has Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that South Port New Zealand has grown earnings per share at 5.6% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.

Our Thoughts On South Port New Zealand's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. We don't think South Port New Zealand is a great stock to add to your portfolio if income is your focus.

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. To that end, South Port New Zealand has 3 warning signs (and 1 which can't be ignored) we think you should know about. Is South Port New Zealand 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.