Grange Resources (ASX: GRR) increases dividend to AU $ 0.02

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Barn Resources Limited (ASX: GRR) will increase its dividend on September 30 to AU $ 0.02. This brings the annual payout to 7.1% of the current share price, which is sadly less than what the industry is paying.

Check out our latest review for Grange Resources

Grange Resources dividend is well covered by earnings

While return is important, another factor to consider regarding a company’s dividend is whether current payout levels are achievable. However, Grange Resources’ profits easily cover the dividend. This means that most of its profits are kept to grow the business.

Over the next year, EPS could increase by 41.9% if recent trends continue. If the dividend continues on that path, the payout ratio could be 12% by next year, which we believe may be quite sustainable going forward.

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Dividend volatility

The company has a long history of dividends, but it doesn’t look good with the cuts of the past. Payments haven’t really changed in 10 years. The dividend has experienced some fluctuation in the past, so even though the dividend has been increased this year, we must remember that it has been reduced in the past.

The dividend seems likely to increase

With a relatively volatile dividend, it is even more important to assess whether earnings per share are increasing, which could indicate a growing dividend in the future. It is encouraging to see that Grange Resources has increased its earnings per share by 42% per year over the past five years. Rapid earnings growth and a low payout ratio suggest that this company has indeed reinvested in its business. If this continues, this business could have a bright future.

We really like the dividend from Grange Resources

Overall, we think it could be an attractive income stock, and it’s only getting better by paying a higher dividend this year. The company easily earns enough to cover its dividend payments and it’s great to see that those profits translate into cash flow. All of these factors taken into account, we believe this has strong potential as a dividend-paying stock.

Investors generally tend to favor companies with a consistent and stable dividend policy over those that operate irregularly. At the same time, there are other factors that our readers should be aware of before investing any capital in a stock. For example, we have chosen 2 warning signs for Grange Resources that investors should be aware of before committing capital to this stock. If you are a dividend investor, you can also check out our curated list of high performing dividend stocks.

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 documents. Simply Wall St has no position in any of the stocks mentioned.

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