Spok Holdings (NASDAQ:SPOK) Has Announced A Dividend Of $0.3125

Spok Holdings, Inc.'s (NASDAQ:SPOK) investors are due to receive a payment of $0.3125 per share on 24th of June. Based on this payment, the dividend yield on the company's stock will be 7.7%, which is an attractive boost to shareholder returns.

We've discovered 2 warning signs about Spok Holdings. View them for free.

Spok Holdings' Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, the company's dividend was much higher than its earnings. Without profits and cash flows increasing, it would be difficult for the company to continue paying the dividend at this level.

Earnings per share is forecast to rise by 0.2% over the next year. If the dividend continues on its recent course, the payout ratio in 12 months could be 179%, which is a bit high and could start applying pressure to the balance sheet.

See our latest analysis for Spok Holdings

Spok Holdings Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The dividend has gone from an annual total of $0.50 in 2015 to the most recent total annual payment of $1.25. This means that it has been growing its distributions at 9.6% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.

Spok Holdings' Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. Spok Holdings has seen EPS rising for the last five years, at 51% per annum. Although earnings per share is up nicely Spok Holdings is paying out 159% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

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. Although they have been consistent in the past, we think the payments are a little high to be sustained. We don't think Spok Holdings is a great stock to add to your portfolio if income is your focus.

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. Just as an example, we've come across 2 warning signs for Spok Holdings you should be aware of, and 1 of them shouldn't be ignored. Is Spok Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.