Alta Equipment Group Inc. (NYSE:ALTG) will pay a dividend of $0.057 on the 30th of August. The dividend yield will be 2.5% based on this payment which is still above the industry average.
See our latest analysis for Alta Equipment Group
Alta Equipment Group Might Find It Hard To Continue The Dividend
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Even in the absence of profits, Alta Equipment Group is paying a dividend. The company is also yet to generate cash flow, so the dividend sustainability is definitely questionable.
Analysts expect the EPS to grow by 74.8% over the next 12 months. While it is good to see income moving in the right direction, it still looks like the company won’t achieve profitability. Unless this happens fairly soon, the dividend could start to come under pressure.
Alta Equipment Group Doesn’t Have A Long Payment History
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The most recent annual payment of $0.228 is about the same as the annual payment 2 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn’t want to rely on this dividend too much.
The Company Could Face Some Challenges Growing The Dividend
Some investors will be chomping at the bit to buy some of the company’s stock based on its dividend history. Alta Equipment Group has impressed us by growing EPS at 119% per year over the past five years. While the company hasn’t yet recorded a profit, the growth rates are healthy. If profitability can be achieved soon and growth continues apace, this stock could certainly turn into a solid dividend payer.
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. In general, the distributions are a little bit higher than we would like, but we can’t ignore the fact the quickly growing earnings gives this stock great potential in the future. Overall, we don’t think this company has the makings of a good income stock.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. 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 4 warning signs for Alta Equipment Group you should be aware of, and 1 of them doesn’t sit too well with us. Is Alta Equipment Group 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.
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