Autosports Group Limited's (ASX:ASG) dividend will be increasing from last year's payment of the same period to A$0.09 on 31st of May. This will take the dividend yield to an attractive 8.3%, providing a nice boost to shareholder returns.

View our latest analysis for Autosports Group

Autosports Group's Payment Has Solid Earnings Coverage

If the payments aren't sustainable, a high yield for a few years won't matter that much. The last dividend was quite easily covered by Autosports Group's earnings. This indicates that quite a large proportion of earnings is being invested back into the business.

EPS is set to fall by 18.3% over the next 12 months. If recent patterns in the dividend continue, we could see the payout ratio reaching 81% in the next 12 months, which is on the higher end of the range we would say is sustainable. historic-dividend

Autosports Group's Dividend Has Lacked Consistency

Looking back, Autosports Group's dividend hasn't been particularly consistent. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The dividend has gone from an annual total of A$0.046 in 2017 to the most recent total annual payment of A$0.18. This means that it has been growing its distributions at 26% per annum over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Autosports Group has seen EPS rising for the last five years, at 21% per annum. Autosports Group is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

We Really Like Autosports Group's Dividend

Overall, a dividend increase is always good, and we think that Autosports Group is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. We should point out that the earnings are expected to fall over the next 12 months, which won't be a problem if this doesn't become a trend, but could cause some turbulence in the next year. All in all, this checks a lot of the boxes we look for when choosing an income stock.



Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Autosports Group (of which 1 makes us a bit uncomfortable!) you should know about. Is Autosports 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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