Stock Analysis

Winmark (NASDAQ:WINA) Has Announced That It Will Be Increasing Its Dividend To US$0.70

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NasdaqGM:WINA
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Winmark Corporation (NASDAQ:WINA) has announced that it will be increasing its dividend on the 1st of June to US$0.70, which will be 56% higher than last year. This takes the dividend yield from 4.5% to 4.6%, which shareholders will be pleased with.

See our latest analysis for Winmark

Winmark'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. However, Winmark's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to grow by 15.7% over the next year if recent trends continue. Assuming the dividend continues along recent trends, our estimates say the payout ratio could reach 90%, which is definitely on the higher side, but we wouldn't necessarily say this is unsustainable.

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NasdaqGM:WINA Historic Dividend May 4th 2022

Winmark Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the dividend has gone from US$0.12 to US$9.30. This means that it has been growing its distributions at 55% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Winmark has impressed us by growing EPS at 16% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.

Winmark Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Winmark 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. All of these factors considered, we think this has solid potential as a dividend stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Winmark (of which 1 is potentially serious!) you should know about. Is Winmark not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

What are the risks and opportunities for Winmark?

Winmark Corporation, together with its subsidiaries, operates as a franchisor of retail store concepts that buy, sell, trade, and consign used merchandise primarily in the United States and Canada.

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Rewards

  • Earnings grew by 12.1% over the past year

Risks

  • Negative shareholders equity

  • Has a high level of debt

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