Natural Grocers by Vitamin Cottage (NYSE:NGVC) Is Due To Pay A Dividend Of $0.10

Natural Grocers by Vitamin Cottage, Inc.'s (NYSE:NGVC) investors are due to receive a payment of $0.10 per share on 14th of June. This means the annual payment is 3.4% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Natural Grocers by Vitamin Cottage

Natural Grocers by Vitamin Cottage's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite comfortably covered by Natural Grocers by Vitamin Cottage's earnings, but it was a bit tighter on the cash flow front. The company is clearly earning enough to pay this type of dividend, but it is definitely focused on returning cash to shareholders, rather than growing the business.

Looking forward, earnings per share could rise by 9.2% 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.

Natural Grocers by Vitamin Cottage Is Still Building Its Track Record

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. Since 2020, the annual payment back then was $0.28, compared to the most recent full-year payment of $0.40. This means that it has been growing its distributions at 13% per annum over that time. We're not overly excited about the relatively short history of dividend payments, however the dividend is growing at a nice rate and we might take a closer look.

We Could See Natural Grocers by Vitamin Cottage's Dividend Growing

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see that Natural Grocers by Vitamin Cottage has been growing its earnings per share at 9.2% a year over the past five years. The company is paying a reasonable amount of earnings to shareholders, and is growing earnings at a decent rate so we think it could be a decent dividend stock.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The low payout ratio is a redeeming feature, but generally we are not too happy with the payments Natural Grocers by Vitamin Cottage has been making. We would probably look elsewhere for an income investment.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 2 warning signs for Natural Grocers by Vitamin Cottage that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high yield 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.