Only Four Days Remaining to Benefit from Data#3's (ASX:DTL) Dividend

March 10, 2025 03:30 PM AEDT | By Team Kalkine Media

Only Four Days Remaining to Benefit from Data#3's (ASX:DTL) Dividend — Image source: Shutterstock

Analyzing Dividend Sustainability

Scrutinizing dividend sustainability is crucial. Last year, Data#3's dividend payout ratio reached 91% of its profits, raising questions on its sustainability. However, it's worth noting that 70% of its free cash flow also went towards dividend distributions, which falls within a common range for many companies. When the dividends exceed earnings repeatedly, it could be a sign of unsustainable practices during an economic downturn.

Growth in Earnings and Dividends

Companies with strong earnings growth often offer more rewarding dividends, and Data#3 seems to align with this notion. In the past decade, its dividends have increased, on average, by 19% annually. Such consistent growth, alongside a 19% yearly rise in earnings per share over the last five years, reflects well on its future prospects.

Final Thoughts

Data#3 Limited's combination of growing earnings and increasing dividends may initially present it as an attractive dividend stock. However, concerns arise due to the gap between its profit payout and cash flow payout ratios, suggesting some financial adjustments might have taken place. Investors looking to further explore Data#3's risks should consider thoroughly analyzing these warning signs.

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