Enprise Group Limited (NZSE:ENS) Passed Our Checks, And It's About To Pay A NZ$0.02 Dividend
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Enprise Group Limited (NZSE:ENS) is about to go ex-dividend in just 2 days. Investors can purchase shares before the 1st of March in order to be eligible for this dividend, which will be paid on the 16th of March.
Enprise Group's next dividend payment will be NZ$0.02 per share. Last year, in total, the company distributed NZ$0.02 to shareholders. Looking at the last 12 months of distributions, Enprise Group has a trailing yield of approximately 3.8% on its current stock price of NZ$1.06. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. We need to see whether the dividend is covered by earnings and if it's growing.
See our latest analysis for Enprise Group
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Enprise Group has a low and conservative payout ratio of just 17% of its income after tax.
Click here to see how much of its profit Enprise Group paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're encouraged by the steady growth at Enprise Group, with earnings per share up 3.8% on average over the last five years. Growth has been anaemic. Yet with more than 75% of its earnings being kept in the business, there is ample room to reinvest in growth or lift the payout ratio - either of which could increase the dividend.
Enprise Group also issued more than 5% of its market cap in new stock during the past year, which we feel is likely to hurt its dividend prospects in the long run. It's hard to grow dividends per share when a company keeps creating new shares.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last five years, Enprise Group has lifted its dividend by approximately 5.9% a year on average. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.
The Bottom Line
Has Enprise Group got what it takes to maintain its dividend payments? It has been growing its earnings per share somewhat in recent years, although it reinvests more than half its earnings in the business, which could suggest there are some growth projects that have not yet reached fruition. In summary, Enprise Group appears to have some promise as a dividend stock, and we'd suggest taking a closer look at it.
While it's tempting to invest in Enprise Group for the dividends alone, you should always be mindful of the risks involved. To that end, you should learn about the 5 warning signs we've spotted with Enprise Group (including 1 which can't be ignored).
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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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