The Hackett Group, Inc.'s (NASDAQ:HCKT) investors are due to receive a payment of US$0.10 per share on 30th of December. This means the annual payment is 1.8% of the current stock price, which is above the average for the industry.
Hackett Group's Earnings Easily Cover the Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last dividend was quite easily covered by Hackett Group's earnings. This means that a large portion of its earnings are being retained to grow the business.
The next year is set to see EPS grow by 19.4%. Assuming the dividend continues along recent trends, we think the payout ratio could be 43% by next year, which is in a pretty sustainable range.
Hackett Group Is Still Building Its Track Record
The dividend's track record has been pretty solid, but with only 9 years of history we want to see a few more years of history before making any solid conclusions. The first annual payment during the last 9 years was US$0.10 in 2012, and the most recent fiscal year payment was US$0.40. This means that it has been growing its distributions at 17% per annum over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
Hackett Group Could Grow Its Dividend
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Hackett Group has seen EPS rising for the last five years, at 6.2% per annum. Earnings are on the uptrend, and it is only paying a small portion of those earnings to shareholders.
Our Thoughts On Hackett Group's Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. While the payout ratios are a good sign, we are less enthusiastic about the company's dividend record. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Hackett Group that investors should know about before committing capital to this stock. We have also put together a list of global stocks with a solid dividend.
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