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VH Global Sustainable Energy Opportunities' (LON:GSEO) Dividend Will Be Increased To £0.0142

VH Global Sustainable Energy Opportunities plc (LON:GSEO) has announced that it will be increasing its periodic dividend on the 28th of March to £0.0142, which will be 2.9% higher than last year's comparable payment amount of £0.0138. This will take the annual payment to 7.6% of the stock price, which is above what most companies in the industry pay.

Check out our latest analysis for VH Global Sustainable Energy Opportunities

VH Global Sustainable Energy Opportunities Doesn't Earn Enough To Cover Its Payments

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Prior to this announcement, the company was paying out 143% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

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If the company can't turn things around, EPS could fall by 15.6% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 175%, which could put the dividend in jeopardy if the company's earnings don't improve.

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historic-dividend

VH Global Sustainable Energy Opportunities Doesn't Have A Long Payment History

The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The annual payment during the last 2 years was £0.025 in 2022, and the most recent fiscal year payment was £0.0552. This means that it has been growing its distributions at 49% per annum over that time. VH Global Sustainable Energy Opportunities has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though VH Global Sustainable Energy Opportunities' EPS has declined at around 16% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

VH Global Sustainable Energy Opportunities' Dividend Doesn't Look Great

In summary, investors will like to be receiving a higher dividend, but we have some questions about whether it can be sustained over the long term. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. Overall, this doesn't get us very excited from an income standpoint.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for VH Global Sustainable Energy Opportunities that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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.