Lucky Strike Entertainment (NYSE:LUCK) Will Pay A Dividend Of $0.055

Lucky Strike Entertainment Corporation (NYSE:LUCK) has announced that it will pay a dividend of $0.055 per share on the 12th of September. This payment means that the dividend yield will be 2.1%, which is around the industry average.

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Lucky Strike Entertainment's Projections Indicate Future Payments May Be Unsustainable

Estimates Indicate Lucky Strike Entertainment's Could Struggle to Maintain Dividend Payments In The Future

Lucky Strike Entertainment's Future Dividends May Potentially Be At Risk

We aren't too impressed by dividend yields unless they can be sustained over time. Even in the absence of profits, Lucky Strike Entertainment is paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Over the next year, EPS is forecast to expand by 128.9%. 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.

Check out our latest analysis for Lucky Strike Entertainment

Lucky Strike Entertainment 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. The payments haven't really changed that much since 2 years ago. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

The Company Could Face Some Challenges Growing The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Lucky Strike Entertainment has impressed us by growing EPS at 107% per year over the past five years. The company hasn't been turning a profit, but it running in the right direction. If this trajectory continues and the company can turn a profit soon, it could bode well for the dividend going forward.

Lucky Strike Entertainment's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Lucky Strike Entertainment's payments, as there could be some issues with sustaining them into the future. 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. We would probably look elsewhere for an income investment.

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, Lucky Strike Entertainment has 2 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Lucky Strike Entertainment 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.