Academy Sports and Outdoors (NASDAQ:ASO) Has Announced That It Will Be Increasing Its Dividend To $0.13

Academy Sports and Outdoors, Inc. (NASDAQ:ASO) has announced that it will be increasing its periodic dividend on the 17th of April to $0.13, which will be 18% higher than last year's comparable payment amount of $0.11. Even though the dividend went up, the yield is still quite low at only 1.0%.

Check out our latest analysis for Academy Sports and Outdoors

Academy Sports and Outdoors' Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. However, prior to this announcement, Academy Sports and Outdoors' 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 22.2%. Assuming the dividend continues along recent trends, we think the payout ratio could be 6.8% by next year, which is in a pretty sustainable range.

Academy Sports and Outdoors 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. Since 2022, the annual payment back then was $0.30, compared to the most recent full-year payment of $0.44. This implies that the company grew its distributions at a yearly rate of about 14% over that duration. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Academy Sports and Outdoors has grown earnings per share at 32% per year over the past five years. Rapid earnings growth and a low payout ratio suggest this company has been effectively reinvesting in its business. Should that continue, this company could have a bright future.

Academy Sports and Outdoors Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Academy Sports and Outdoors is a strong income stock thanks to its track record and growing earnings. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

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. Earnings growth generally bodes well for the future value of company dividend payments. See if the 19 Academy Sports and Outdoors analysts we track are forecasting continued growth with our free report on analyst estimates for the company. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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