Alta Equipment Group (NYSE:ALTG) Is Paying Out A Dividend Of $0.057

Alta Equipment Group Inc. (NYSE:ALTG) will pay a dividend of $0.057 on the 31st of August. This means that the annual payment will be 1.5% of the current stock price, which is in line with the average for the industry.

Check out our latest analysis for Alta Equipment Group

Alta Equipment Group's Payment Has Solid Earnings Coverage

We like a dividend to be consistent over the long term, so checking whether it is sustainable is important. Before this announcement, Alta Equipment Group was paying out 153% of what it was earning, and not generating any free cash flows either. Paying out such a large dividend compared to earnings while also not generating free cash flows is a major warning sign for the sustainability of the dividend as these levels are certainly a bit high.

According to analysts, EPS should be several times higher next year. Assuming the dividend continues along recent trends, we estimate that the payout ratio could reach 22%, which is in a comfortable range for us.

Alta Equipment Group Doesn't Have A Long Payment History

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend 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.

Dividend Growth Could Be Constrained

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Alta Equipment Group has impressed us by growing EPS at 109% per year over the past three years. EPS has been growing well, but Alta Equipment Group has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

Alta Equipment Group's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. This company is not in the top tier of income providing stocks.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Alta Equipment Group that investors should take into consideration. Is Alta Equipment Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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