\n \n \n “.concat(self.i18n.t(‘search.voice.recognition_retry’), “\n Bytes Technology Group plc (LON:BYIT) has announced that it will be increasing its dividend from last year’s comparable payment on the 4th of August to £0.126. This makes the dividend yield 3.3%, which is above the industry average. If the payments aren’t sustainable, a high yield for a few years won’t matter that much. The last payment was quite easily covered by earnings, but it made up 98% of cash flows. While the company may be more focused on returning cash to shareholders than growing the business at this time, we think that a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges. Looking forward, earnings per share is forecast to rise by 29.3% over the next year. If the dividend continues on this path, the payout ratio could be 69% by next year, which we think can be pretty sustainable going forward. Without a track record of dividend payments, we can’t make a judgement on how stable it has been. This doesn’t mean that the company can’t pay a good dividend, but just that we want to wait until it can prove itself. Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Bytes Technology Group has seen EPS rising for the last three years, at 18% per annum. While on an earnings basis, this company looks appealing as an income stock, the cash payout ratio still makes us cautious. In summary, while it’s always good to see the dividend being raised, we don’t think Bytes Technology Group’s payments are rock solid. While Bytes Technology Group is earning enough to cover the payments, the cash flows are lacking. We would probably look elsewhere for an income investment. It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we’ve picked out 1 warning sign for Bytes Technology Group that investors should take into consideration. Is Bytes Technology Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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. Join A Paid User Research SessionYou’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here
