P10, Inc. (NYSE:PX) has announced that it will pay a dividend of $0.0325 per share on the 20th of December. This payment means the dividend yield will be 1.4%, which is below the average for the industry.
Check out our latest analysis for P10
P10's Payment Has Solid Earnings Coverage
Even a low dividend yield can be attractive if it is sustained for years on end. P10 is not generating a profit, but its free cash flows easily cover the dividend, leaving plenty for reinvestment in the business. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.
Earnings per share is forecast to rise exponentially over the next year. Assuming the dividend continues along the path it has been on, the payout ratio could get to 91% which is certainly still sustainable.
P10 Doesn't Have A Long Payment History
It is tough to make a judgement on how stable a dividend is when the company hasn't been paying one for very long. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
P10 May Find It Hard To Grow The Dividend
The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately, P10's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. With no profits, we don't think P10 has much potential to grow the dividend in the future.
In Summary
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about P10's payments, as there could be some issues with sustaining them into the future. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. 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. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've identified 2 warning signs for P10 (1 can't be ignored!) that you should be aware of before investing. 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.
About NYSE:PX
P10
Operates as a multi-asset class private market solutions provider in the alternative asset management industry in the United States.
Reasonable growth potential with mediocre balance sheet.
