LiveChat Software (WSE:LVC) shareholders will receive a higher dividend than last year

LiveChat Software SAs (WSE:LVC) will increase the dividend to PLN 1.14 on August 5. The dividend yield of 4.1% is roughly in line with the industry average.

Check out our latest analysis for LiveChat software

The earnings of the LiveChat software easily cover the payouts

While it’s always good to see a solid dividend yield, we should also check if the payment is feasible. LiveChat Software earned enough to cover its previous dividend, but it paid out a fairly large chunk of its free cash flow. The company earns enough to make the dividend manageable, but the 84% cash payout ratio shows that it’s more focused on returning cash to shareholders than growing the company.

EPS is expected to grow by 20.6% next year. If recent patterns in the dividend continue, the payout ratio could be 93% 12 months from now, which is a bit high but can definitely be sustainable.

historical dividend
WSE:LVC Historical Dividend July 4, 2022

LiveChat software is still building its track record

It’s great to see that LiveChat Software has been paying a stable dividend for a number of years, but we want to be a little cautious as to whether this will be the case over a full economic cycle. The first annual payment in the last 8 years was PLN 0.37 in 2014, and the last payment in the fiscal year was PLN 3.69. This means the company has grown its payouts at an annual rate of about 33% over that period. LiveChat Software has grown its dividend fairly quickly, which is exciting. However, the short payment history makes us question whether this performance will last through a full market cycle.

The dividend is likely to increase

Investors might be attracted to the stock because of the quality of its payment history. LiveChat Software has impressed us with annual EPS growth of 24% over the past five years. The company hasn’t had trouble growing, although it returns plenty of capital to shareholders, which is a very nice combination for a dividend stock.

in summary

Overall, this probably isn’t a great income stock, even though the dividend is currently being increased. The company hasn’t paid a very consistent dividend over time, although it has only paid out a small portion of profits. We’d be cautious about relying on this stock primarily for dividend income.

Investors generally prefer companies with a consistent, stable dividend policy to those with an erratic one. However, there are other things investors should consider when analyzing stock performance. For example, we picked out 1 LiveChat Software Warning Sign investors should consider. Looking for more high-yield dividend ideas? Try our Collection of strong dividend payers.

This Simply Wall St article is of a general nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your goals or financial situation. Our goal is to offer you long-term focused analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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