Via Renewables' (NASDAQ:VIA) Dividend Will Be US$0.18

Via Renewables, Inc.'s (NASDAQ:VIA) investors are due to receive a payment of US$0.18 per share on 15th of March. The dividend yield will be 6.4% based on this payment which is still above the industry average.

See our latest analysis for Via Renewables

Via Renewables Doesn't Earn Enough To Cover Its Payments

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, Via Renewables' dividend was making up a very large proportion of earnings and perhaps more concerning was that it was 118% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

EPS is set to fall by 10.6% over the next 12 months if recent trends continue. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 209%, which is definitely a bit high to be sustainable going forward.

Via Renewables Is Still Building Its Track Record

It is great to see that Via Renewables 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 first annual payment during the last 7 years was US$0.48 in 2015, and the most recent fiscal year payment was US$0.72. This means that it has been growing its distributions at 6.0% per annum over that time. Via Renewables has been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Let's not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 11% over the last five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Via Renewables' payments, as there could be some issues with sustaining them into the future. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 2 warning signs for Via Renewables that you should be aware of before investing. We have also put together a list of global stocks with a solid dividend.

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