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NeraTel: What is a sustainable dividend payout?

Wednesday, August 13, 2014

I was having a conversation with a friend this evening and he asked whether a 6c dividend per share is sustainable and I remember I replied to a similar question on my FB wall not too long ago. So, for those who do not follow me on FB, here it is:


"One of the assumptions I had when buying into NeraTel was a sustainable dividend payout of 4c per share. So, when I got in at 42c to 63c, I was looking at a yield of 6.3% to 9.5%. At 68c, when I added to my position, the yield was 5.88%. Even at 73c, the yield was 5.48%.

"As a company tries to grow, it is possible that dividend might reduce. However, being a net cash company, NeraTel could sustain higher dividend payouts if they want to. However, this will be essentially a return of capital if DPS should be higher than EPS."

Related posts:
1. NeraTel: 6 points to note.
2. NeraTel: Added to my long position.

2 comments:

pf said...

Neratel had appreciated by abt 8% since i bought it recently. :))

Quite happy. Thanks for posting abt it.

When would you be adding to your position again?

AK71 said...

Hi pf,

Not at the current price but if its share price should retrace to stronger supports, I might buy more. :)

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