Entravision Communications Corporation (NYSE:EVC) will pay a dividend of US$0.025 on the 30th of June. Based on this payment, the dividend yield will be 2.0%, which is fairly typical for the industry.
Entravision Communications' Earnings Easily Cover the Distributions
We aren't too impressed by dividend yields unless they can be sustained over time. However, Entravision Communications' earnings easily cover the dividend. This means that most of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 61.3%. Assuming the dividend continues along recent trends, we think the payout ratio could be 21% by next year, which is in a pretty sustainable range.
Entravision Communications Doesn't Have A Long Payment History
It is great to see that Entravision Communications 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 2013, the dividend has gone from US$0.12 to US$0.10. This works out to be a decline of approximately 2.0% per year over that time. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.
The Dividend Has Growth Potential
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Entravision Communications has impressed us by growing EPS at 5.6% per year over the past five years. A low payout ratio and decent growth suggests that the company is reinvesting well, and it also has plenty of room to increase the dividend over time.
Overall, we think Entravision Communications is a solid choice as a dividend stock, even though the dividend wasn't raised this year. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. The dividend looks okay, but there have been some issues in the past, so we would be a little bit cautious.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For instance, we've picked out 4 warning signs for Entravision Communications that investors should take into consideration. Is Entravision Communications not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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