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

The board of GCM Grosvenor Inc. (NASDAQ:GCMG) has announced that it will pay a dividend on the 15th of June, with investors receiving $0.11 per share. This means the annual payment is 6.2% of the current stock price, which is above the average for the industry.

See 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. Prior to this announcement, the company was paying out 134% of what it was earning, however the dividend was quite comfortably covered by free cash flows at a cash payout ratio of only 48%. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

Over the next year, EPS is forecast to expand by 183.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 46%, 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

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. Since 2021, the annual payment back then was $0.24, compared to the most recent full-year payment of $0.44. This works out to be a compound annual growth rate (CAGR) of approximately 35% a year 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.

GCM Grosvenor Might Find It Hard To Grow Its Dividend

Investors could be attracted to the stock based on the quality of its payment history. We are encouraged to see that GCM Grosvenor has grown earnings per share at 82% per year over the past three years. EPS has been growing well, but GCM Grosvenor has been paying out a massive proportion of its earnings, which can make the dividend tough to maintain.

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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 3 warning signs for GCM Grosvenor you should be aware of, and 2 of them are a bit concerning. Is GCM Grosvenor 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.