Stock Analysis

TEGNA (NYSE:TGNA) Will Pay A Dividend Of $0.095

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The board of TEGNA Inc. (NYSE:TGNA) has announced that it will pay a dividend of $0.095 per share on the 3rd of July. Based on this payment, the dividend yield will be 2.4%, which is fairly typical for the industry.

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TEGNA's Payment Has Solid Earnings Coverage

We aren't too impressed by dividend yields unless they can be sustained over time. Before making this announcement, TEGNA was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

Over the next year, EPS is forecast to fall by 18.3%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 16%, which we are pretty comfortable with and we think is feasible on an earnings basis.

NYSE:TGNA Historic Dividend May 13th 2023

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was $0.80 in 2013, and the most recent fiscal year payment was $0.38. Doing the maths, this is a decline of about 7.2% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Dividend Growth May Be Hard To Achieve

With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. Earnings has been rising at 4.8% per annum over the last five years, which admittedly is a bit slow. While growth may be thin on the ground, TEGNA could always pay out a higher proportion of earnings to increase shareholder returns.

Our Thoughts On TEGNA's Dividend

Overall, we think TEGNA is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The dividend has been at reasonable levels historically, but that hasn't translated into a consistent payment. The payment isn't stellar, but it could make a decent addition to a dividend portfolio.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for TEGNA that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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