Gray Television (NYSE: GTN) could be a buy for its next dividend
Gray Television, Inc. (NYSE: GTN) is set to trade off dividend within the next four days. The ex-dividend date is one working day before the registration date, which is the deadline by which shareholders must be present on the books of the company to be eligible for a dividend payment. The ex-dividend date is important because any share transaction must have been settled before the registration date to be eligible for a dividend. Thus, you can buy Gray Television shares before June 14 in order to receive the dividend that the company will pay on June 30.
The upcoming dividend for Gray Television will put a total of US $ 0.08 per share in the pockets of shareholders. If you are buying this business for its dividend, you should know if Gray Television’s dividend is reliable and sustainable. Therefore, readers should always check to see if Gray Television has been able to increase its dividends or if the dividend could be reduced.
Check out our latest analysis for Gray Television
If a company pays more dividends than it has earned, then the dividend could become unsustainable – which is not an ideal situation. Gray Television paid only 2.2% of its profits last year, which in our opinion is moderately low and leaves a lot of room for unforeseen circumstances. Having said that, even very profitable companies can sometimes not generate enough cash to pay the dividend, which is why we always need to check if the dividend is covered by cash flow. It paid 10% of its free cash flow as dividends last year, which is conservative.
It is encouraging to see that the dividend is covered by both earnings and cash flow. This usually suggests that the dividend is sustainable, as long as profits don’t drop sharply.
Click here to view the company’s payout ratio, as well as analysts’ estimates of its future dividends.
Have profits and dividends increased?
Companies with consistently increasing earnings per share usually make the best dividend-paying stocks because they generally find it easier to increase dividends per share. If profits fall enough, the company could be forced to cut its dividend. That’s why it’s heartwarming to see Gray Television’s revenues skyrocket, up 44% annually over the past five years. Gray Television looks like a real growing business, with earnings per share growing at a breakneck pace and the business reinvesting most of its earnings back into the business.
This is the first year Gray Television has paid a dividend, so it doesn’t yet have much history to compare to.
Should investors buy Gray Television for the next dividend? We love that Gray Television is increasing its earnings per share while simultaneously paying out a small percentage of its earnings and cash flow. These characteristics suggest that the company is reinvesting in growing its business, while the prudent payout ratio also implies reduced risk of dividend reduction in the future. It is a promising combination that should mark this company worthy of further attention.
In light of this, while Gray Television has an attractive dividend, it is worth knowing the risks associated with this stock. Our analysis shows 3 warning signs for Gray Television which we strongly recommend that you consult before investing in the company.
If you are in the dividend-paying stock market, we recommend that you check out our list of the highest dividend-paying stocks with a yield above 2% and a future dividend.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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