Village Super Market (NASDAQ: VLGE.A) dividend will be US $ 0.25

The advice of Village Supermarket, Inc. (NASDAQ: VLGE.A) announced that it will pay a dividend of US $ 0.25 per share on October 28. Based on this payment, the dividend yield on the shares of the company will be 4.6%, which is an attractive increase in returns for shareholders.

See our latest analysis for Village Super Market

Village Super Market payment has strong revenue coverage

While it’s great to have a strong dividend yield, we also need to determine if the payout is sustainable. The last payment was 74% of the profits, but the cash flow was much higher. Since the dividend only pays money to shareholders, we are more concerned with the cash payout ratio from which we can see that there is plenty left for reinvestment in the company.

Looking ahead, could drop 4.0% if the company can not turn the situation around in recent years. Assuming the dividend continues according to recent trends, we think the payout ratio could reach 77%, which is definitely on the higher side.

NasdaqGS: VLGE.A Historic dividend 23 September 2021

Dividend volatility

The history of the company’s dividends has been marked by instability, with at least one decline in the past 10 years. Since 2011, the dividend has increased from US $ 0.45 to US $ 1.00. This works out to a compound annual growth rate (CAGR) of about 8.3% per year over that time period. We love to see dividends rise at a reasonable rate, but with at least a substantial reduction in payouts, we’re not sure this dividend stock would be ideal for someone who intends to live off their income.

Dividend growth can be hard to achieve

Growth in earnings per share could be a mitigating factor considering past dividend fluctuations. Village Super Market has seen its earnings per share drop 4.0% per year over the past five years. Falling profits will inevitably lead the company to pay a lower dividend in line with lower profits.

Our thoughts on the dividend of the village super market

In summary, while it is good to see that the dividend has not been reduced, we are a little cautious about the Village Super Market payouts as there could be issues maintaining them going forward. In the past, payments have been volatile, but in the short term the dividend could be reliable as the company generates enough cash to cover it. Overall, we don’t think this company has the makings of a good income stock.

Companies with a stable dividend policy are likely to benefit from greater investor interest than those with a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they aren’t the only factors our readers should be aware of when valuing a business. As an example, we have met 2 warning signs for Village Super Market you need to be aware of it, and one of them is a bit of a concern. We have also set up a list of global stocks with a solid dividend.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. 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 material. Simply Wall St has no position in the mentioned stocks.
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