Paramount Global (NASDAQ:PARA) Is Paying Out Less In Dividends Than Last Year
Paramount Global (NASDAQ:PARA) has announced that on 3rd of July, it will be paying a dividend of$0.05, which a reduction from last year’s comparable dividend. This payment takes the dividend yield to 1.4%, which only provides a modest boost to overall returns.
While the dividend yield is important for income investors, it is also important to consider any large share price moves, as this will generally outweigh any gains from distributions. Paramount Global’s stock price has reduced by 37% in the last 3 months, which is not ideal for investors and can explain a sharp increase in the dividend yield.
Check out our latest analysis for Paramount Global
Paramount Global’s Earnings Easily Cover The Distributions
Even a low dividend yield can be attractive if it is sustained for years on end. Even though Paramount Global is not generating a profit, it is still paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.
Looking forward, earnings per share is forecast to rise exponentially over the next year. If the dividend extends its recent trend, estimates say the dividend could reach 29%, which we would be comfortable to see continuing.
Paramount Global’s Track Record Isn’t Great
The company hasn’t been particularly volatile, but it has been steadily decreasing which of course is not what investors like to see. Since 2013, the annual payment back then was $0.48, compared to the most recent full-year payment of $0.20. Doing the maths, this is a decline of about 8.4% per year. Generally, we don’t like to see a dividend that has been declining over time as this can degrade shareholders’ returns and indicate that the company may be running into problems.
Dividend Growth May Be Hard To Come By
Given that the track record hasn’t been stellar, we really want to see earnings per share growing over time. Over the past five years, it looks as though Paramount Global’s EPS has declined at around 9.9% a year. A modest decline in earnings isn’t great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed. Earnings are forecast to grow over the next 12 months and if that happens we could still be a little bit cautious until it becomes a pattern.
Paramount Global’s Dividend Doesn’t Look Sustainable
In summary, dividends being cut isn’t ideal, however it can bring the payment into a more sustainable range. Dividend payments have been pretty consistent for a while, but we do think the payout ratios are a little bit high. This company is not in the top tier of income providing stocks.
It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we’ve identified 1 warning sign for Paramount Global that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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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