GCM Grosvenor (NASDAQ:GCMG) Is Due To Pay A Dividend Of $0.11

GCM Grosvenor Inc.'s (NASDAQ:GCMG) investors are due to receive a payment of $0.11 per share on 15th of June. The dividend yield will be 6.3% based on this payment which is still above the industry average.

Check out our latest analysis for GCM Grosvenor

GCM Grosvenor's Dividend Is Well Covered By Earnings

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, GCM Grosvenor's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

The next year is set to see EPS grow by 104.7%. If the dividend continues along recent trends, we estimate the payout ratio will be 64%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

GCM Grosvenor Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of $0.24 in 2021 to the most recent total annual payment of $0.44. This means that it has been growing its distributions at 35% per annum over that time. GCM Grosvenor has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

GCM Grosvenor'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. GCM Grosvenor has impressed us by growing EPS at 82% per year over the past three years. Although earnings per share is up nicely GCM Grosvenor is paying out 128% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about GCM Grosvenor's payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. To that end, GCM Grosvenor has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about. 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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