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Title: Spur Corporation Dividend Update: Ex-Dividend Date Nears, Investors Excited for Potential Growth
Spur Corporation Ltd (JSE:SUR) stock is set to trade ex-dividend in just three days, as the renowned restaurant chain announces its upcoming dividend payment. Investors are keeping a close eye on this opportunity for potential growth.
Understanding the ex-dividend date is crucial for investors as it determines eligibility for receiving dividends. The record date, which is the day on which a company determines the shareholders entitled to receive a dividend, is usually one business day after the ex-dividend date. To be eligible for the dividend paid on the 18th of September, investors must purchase Spur’s shares before the 13th of September.
Last year, Spur Corporation paid a total of R2.20 per share to its shareholders. This year, the company plans to distribute a dividend of R1.10 per share. With Spur’s current share price at ZAR28.5, this translates to a trailing yield of around 7.7%. While receiving dividends is favorable, it is important to assess Spur’s ability to sustain dividend growth.
Companies typically pay dividends out of their profits. If a company pays out more than it earns, its dividend is at a higher risk of being cut. Spur, however, is paying out a reasonable 74% of its profit, which is in line with industry standards. To ensure dividend sustainability, it’s essential to evaluate the company’s cash flow as well. Fortunately, Spur’s dividend payments constituted only 49% of its generated free cash flow, indicating a comfortable payout ratio.
The fact that Spur’s dividend is substantiated by both profits and cash flow is a positive sign. It suggests that the dividend is sustainable, and a lower payout ratio implies a greater margin of safety against potential cuts.
The best dividend-paying companies are often those with strong growth prospects, as increasing earnings per share make it easier to grow dividends. If a company experiences a decline in earnings and is forced to reduce its dividend, investors may face a loss of investment value. Fortunately, Spur’s earnings per share have been growing steadily at 10% per year over the past five years. Additionally, the company maintains an average payout ratio, indicating a balance between earnings growth and shareholder rewards. This combination may indicate the potential for future dividend increases.
Analyzing a company’s historical rate of dividend growth provides valuable insight into its dividend prospects. Spur has achieved an average annual dividend growth rate of 7.2% over the past decade. The alignment of rising dividends with earnings over a significant period suggests that the company intends to share its growth with shareholders.
Considering Spur’s growing earnings per share, conservative payout ratios, and lower percentage of cash flow paid out, the company appears to have the potential to maintain its dividend payments. However, it is essential to remain vigilant and stay informed about any associated risks.
While Spur shines in terms of dividend prospects, it is always crucial to stay updated on the potential risks associated with the stock. In this case, one warning sign has been identified for Spur, warranting attention from investors.
Investors are advised to exercise caution and conduct thorough research before making investment decisions. It is recommended to consider the complete list of high-yield dividend stocks to gain a comprehensive understanding of available opportunities.
In conclusion, Spur Corporation is approaching its ex-dividend date, presenting an enticing opportunity for investors seeking potential growth. The company’s sustainable dividend, growing earnings per share, and historical rate of dividend growth suggest favorable prospects. However, investors should remain vigilant and assess associated risks.
