Turning Point Brands' (NYSE:TPB) Dividend Will Be $0.06

Turning Point Brands, Inc. (NYSE:TPB) will pay a dividend of $0.06 on the 7th of October. This means the annual payment will be 1.0% of the current stock price, which is lower than the industry average.

View our latest analysis for Turning Point Brands

Turning Point Brands' Payment Has Solid Earnings Coverage

While yield is important, another factor to consider about a company's dividend is whether the current payout levels are feasible. However, prior to this announcement, Turning Point Brands' dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to expand by 26.0%. If the dividend continues on this path, the payout ratio could be 9.5% by next year, which we think can be pretty sustainable going forward.

Turning Point Brands Is Still Building Its Track Record

Turning Point Brands' dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The annual payment during the last 5 years was $0.16 in 2017, and the most recent fiscal year payment was $0.24. This means that it has been growing its distributions at 8.4% per annum over that time. Investors will likely want to see a longer track record of growth before making decision to add this to their income portfolio.

We Could See Turning Point Brands' Dividend Growing

The company's investors will be pleased to have been receiving dividend income for some time. Turning Point Brands has impressed us by growing EPS at 6.5% per year over the past five years. Turning Point Brands definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Turning Point Brands' Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. For instance, we've picked out 1 warning sign for Turning Point Brands that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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