Via Renewables (NASDAQ:VIA) Is Due To Pay A Dividend Of $0.1813

The board of Via Renewables, Inc. (NASDAQ:VIA) has announced that it will pay a dividend on the 15th of December, with investors receiving $0.1813 per share. This makes the dividend yield 9.9%, which will augment investor returns quite nicely.

Check out the opportunities and risks within the US Electric Utilities industry.

Via Renewables' 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. Before making this announcement, Via Renewables was paying out quite a large proportion of both earnings and cash flow, with the dividend being 446% of cash flows. This is certainly a risk factor, as reduced cash flows could force the company to pay a lower dividend.

Earnings per share could rise by 0.1% over the next year if things go the same way as they have for the last few years. If the dividend continues along recent trends, we estimate the payout ratio could reach 93%, which is on the higher side, but certainly still feasible.

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. Since 2014, the dividend has gone from $0.481 total annually to $0.725. This means that it has been growing its distributions at 5.3% per annum over that time. Via Renewables has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. However, Via Renewables' EPS was effectively flat over the past five years, which could stop the company from paying more every year. Earnings are not growing quickly at all, and the company is paying out most of its profit as dividends. This isn't the end of the world, but for investors looking for strong dividend growth they may want to look elsewhere.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The track record isn't great, and the payments are a bit high to be considered sustainable. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Case in point: We've spotted 2 warning signs for Via Renewables (of which 1 can't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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