Hackett Group (NASDAQ:HCKT) Has Announced A Dividend Of US$0.11

The Hackett Group, Inc.'s (NASDAQ:HCKT) investors are due to receive a payment of US$0.11 per share on 8th of July. The dividend yield will be 2.1% based on this payment which is still above the industry average.

See our latest analysis for Hackett Group

Hackett Group's Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, Hackett Group's earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to fall by 19.0%. Assuming the dividend continues along recent trends, we believe the payout ratio could be 39%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Hackett Group Doesn't Have A Long Payment History

It is great to see that Hackett Group has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The dividend has gone from US$0.10 in 2013 to the most recent annual payment of US$0.44. This implies that the company grew its distributions at a yearly rate of about 18% over that duration. Hackett Group has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

Investors could be attracted to the stock based on the quality of its payment history. It's encouraging to see Hackett Group has been growing its earnings per share at 11% a year over the past five years. Hackett Group definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Hackett Group Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Hackett Group might even raise payments in the future. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Hackett Group has 3 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about. 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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