SpartanNash Company The stock (NASDAQ: SPTN) is about to trade excluding dividend in 2 days. Typically, the ex-dividend date is one business day prior to the record date which is the date a company determines which shareholders are eligible to receive a dividend. The ex-dividend date is important because every time a stock is bought or sold, the transaction takes at least two business days to settle. This means that you will have to buy the SpartanNash shares before September 14 to receive the dividend, which will be paid on September 30.
The company’s next dividend payment will be US $ 0.20 per share, and over the past 12 months the company has paid a total of US $ 0.80 per share. Based on the value of last year’s payouts, the SpartanNash share has a rolling return of around 3.8% on the current share price of $ 21. We love to see companies pay a dividend, but it’s also important to make sure that laying the golden eggs is not going to kill our goose that lays the golden eggs! That is why we should always check whether dividend payments seem sustainable and whether the business is growing.
If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Fortunately, SpartanNash’s payout ratio is modest, at just 41% of profits. Yet cash flow is still more important than earnings in valuing a dividend, so we need to see if the company has generated enough cash to pay for its distribution. Fortunately, she has only paid out 27% of her free cash flow in the past year.
It is positive to see that the SpartanNash dividend is covered by both earnings and cash flow, as this is usually a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of profitability. security before the dividend is cut.
NasdaqGS: SPTN Historic dividend September 11, 2021
Have profits and dividends increased?
Companies with strong growth prospects generally make the best dividend payers because dividends are easier to grow when earnings per share improve. If profits fall and the company is forced to cut its dividend, investors could see the value of their investment go up in smoke. With that in mind, we are encouraged by the steady growth of SpartanNash, with earnings per share up 2.6% on average over the past five years. Recent growth has not been impressive. However, companies that see their growth slowing can often choose to pay a higher percentage of their profits to shareholders, which could see the dividend continue to rise.
Another key way to measure a company’s dividend outlook is to measure its historical rate of dividend growth. Over the past 10 years, SpartanNash has increased its dividend by around 15% per year on average. It is encouraging to see the company raising its dividends as profits rise, suggesting at least some corporate interest in rewarding shareholders.
The bottom line
From a dividend perspective, should investors buy or avoid SpartanNash? Earnings per share growth has increased somewhat, and SpartanNash pays less than half of its earnings and cash flow as dividends. This is interesting for several reasons, as it suggests that management may be reinvesting heavily in the company, but it also helps to increase the dividend over time. We’d rather see earnings grow faster, but the best long-term dividend-paying stocks typically combine significant earnings per share growth with a low payout ratio, and SpartanNash is halfway there. SpartanNash looks solid on this analysis overall, and we would definitely consider taking a closer look.
On that note, you’ll want to research the risks that SpartanNash faces. Our analysis shows 2 warning signs for SpartanNash and you should be aware of this before buying any stocks.
A common investment mistake is to buy the first interesting stock you see. Here you can find a list of promising dividend-paying stocks with a yield above 2% and a future dividend.
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