PCTEL (NASDAQ:PCTI) Will Pay A Dividend Of US$0.055

By
Simply Wall St
Published
April 25, 2022
NasdaqGS:PCTI
Source: Shutterstock

The board of PCTEL, Inc. (NASDAQ:PCTI) has announced that it will pay a dividend on the 13th of May, with investors receiving US$0.055 per share. Based on this payment, the dividend yield on the company's stock will be 5.0%, which is an attractive boost to shareholder returns.

See our latest analysis for PCTEL

PCTEL Doesn't Earn Enough To Cover Its Payments

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

Over the next year, EPS is forecast to grow rapidly. If the dividend continues growing along recent trends, we estimate the payout ratio could reach 378%, which is unsustainable.

historic-dividend
NasdaqGS:PCTI Historic Dividend April 25th 2022

PCTEL Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the first annual payment was US$0.12, compared to the most recent full-year payment of US$0.22. This works out to be a compound annual growth rate (CAGR) of approximately 6.2% a year over that time. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

PCTEL's Dividend Might Lack Growth

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. PCTEL has seen EPS rising for the last five years, at 42% per annum. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. We don't think PCTEL is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 5 warning signs for PCTEL (of which 1 is concerning!) you should know about. Is PCTEL not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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