Online investment and analysis portal CapitalCube has compared Saga Communications’ dividend yield to six of its peers, and there’s some good news: Saga’s dividend yield and dividend payout are each higher than the median yield and payout of the six competitors.
But, there’s bad news: CapitalCube says Saga’s average dividend quality score of 50 out of 100 “points to some weakness in the sustainability of its robust payout ratio” — thus making it less attractive for dividend investors seeking current income.
Saga was measured against Emmis Communications, Radio One, Cumulus Media, Salem Media Group, Beasley Broadcast Group, and Entercom Communications.
Saga’s dividend yield is 2.79 percent, and its dividend payout is 38 percent. This compares to a peer median dividend yield of 1.93 percent, and a payout level of 8.30 percent.
“This type of dividend performance might make it a good stock for dividend investors,” CapitalCube noted.
But, it notes that over the 12 months prior to June 30, 2016, Saga paid “a low quality dividend, which represents a yield of 2.04% at the current price.” The source of Saga’s cash to support the dividend paid over the last 12 months, CapitalCube notes, is operating cash flow (coverage of 4.23x), investing cash flow (coverage of -4.49x), issuance cash flow (coverage of -0.18x) and 12-month prior cash (coverage of 4.08x) — for a total dividend coverage of 3.64x.
“These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality,” CapitalCube noted.
On a positive note, the ending cash balance, with a dividend coverage of 2.64x, “provides a moderate cushion in case of a significant reduction of cash flows in the future,” CapitalCube said.
Founded by Ed Christian 30 years ago, Saga has a radio segment comprised of 91 stations in 23 markets and five radio information networks. Its TV holdings consist of five stations and four low-power facilities across three markets.