Shyft Group (NASDAQ:SHYF) Will Pay A Dividend Of $0.05

The Shyft Group, Inc. (NASDAQ:SHYF) has announced that it will pay a dividend of $0.05 per share on the 16th of December. Based on this payment, the dividend yield will be 1.5%, which is fairly typical for the industry.

View our latest analysis for Shyft Group

Shyft Group's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate Shyft Group's Could Struggle to Maintain Dividend Payments In The Future

Shyft Group's Future Dividends May Potentially Be At Risk

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Shyft Group is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. This gives us some comfort about the level of the dividend payments.

The next 12 months is set to see EPS grow by 100.4%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.

Shyft Group Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2014, the annual payment back then was $0.10, compared to the most recent full-year payment of $0.20. This means that it has been growing its distributions at 7.2% per annum over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Over the past five years, it looks as though Shyft Group's EPS has declined at around 20% a year. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

Our Thoughts On Shyft Group's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 2 warning signs for Shyft Group (of which 1 can't be ignored!) you should know about. Is Shyft Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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