Stock Analysis

SpartanNash's (NASDAQ:SPTN) Dividend Will Be $0.215

NasdaqGS:SPTN
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The board of SpartanNash Company (NASDAQ:SPTN) has announced that it will pay a dividend of $0.215 per share on the 30th of June. This means the annual payment is 3.8% of the current stock price, which is above the average for the industry.

Check out our latest analysis for SpartanNash

SpartanNash's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, SpartanNash's dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 229% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

The next year is set to see EPS grow by 156.5%. Under the assumption that the dividend will continue along recent trends, we think the payout ratio could be 36% which would be quite comfortable going to take the dividend forward.

historic-dividend
NasdaqGS:SPTN Historic Dividend June 6th 2023

SpartanNash Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $0.32 in 2013 to the most recent total annual payment of $0.86. This means that it has been growing its distributions at 10% per annum over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

SpartanNash's Dividend Might Lack Growth

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that SpartanNash has grown earnings per share at 40% per year over the past five years. However, SpartanNash isn't reinvesting a lot back into the business, so we wonder how quickly it will be able to grow in the future.

Our Thoughts On SpartanNash's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about SpartanNash's payments, as there could be some issues with sustaining them into the future. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. Overall, we don't think this company has the makings of a good income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 3 warning signs for SpartanNash that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

Valuation is complex, but we're helping make it simple.

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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.