Turners Automotive Group's Dividend: A Cautionary Tale for Investors
Saturday, Jan 4, 2025 3:17 pm ET
5min read 
As investors, we're always on the lookout for companies that offer attractive dividends. Turners Automotive Group (NZSE:TRA) is one such company, with a dividend yield of 4.6%. However, before we dive headfirst into this seemingly lucrative opportunity, let's take a step back and examine the company's dividend history and its implications for investors.
over past 5 years's payout ratio(6529)
Payout Ratio%2020.03.31  | Payout Ratio%2020.06.30 | Payout Ratio%2020.09.30 | Payout Ratio%2020.12.31 | Payout Ratio%2021.03.31 | Payout Ratio%2021.06.30 | Payout Ratio%2021.09.30 | Payout Ratio%2021.12.31 | Payout Ratio%2022.03.31 | Payout Ratio%2022.06.30 | Payout Ratio%2022.09.30 | Payout Ratio%2022.12.31 | Payout Ratio%2023.03.31 | Payout Ratio%2023.06.30 | Payout Ratio%2023.09.30 | Payout Ratio%2023.12.31 | Payout Ratio%2024.03.31 | Payout Ratio%2024.06.30 | Payout Ratio%2024.09.30 | Payout Ratio%2024.12.31  |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 2.79 | 2.63 | 3.16 | 3.77 | 3.76 | 3.76 | 3.45 | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -8.53 | -1.27 | -0.68 | -1.11 | -1.54 | -1.47 | -1.79 | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 4.83 | -- | 43.10 | 2.17 | 2.17 | -10.24 | -1.58 | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- |
| -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | -- | 3.30 | 3.57 | 2.78 | 1.92 | 2.32 | 1.78 | 1.92 | -- |
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Turners Automotive Group's dividend payout ratio has been on the rise in recent years. In 2023, the payout ratio was 72%, up from 69% in 2022. This increase suggests that the company is distributing a larger proportion of its earnings to shareholders as dividends. While this might seem like a positive development, it's essential to consider the potential consequences.
When a company increases its dividend payout ratio, it may be a sign that it's struggling to grow its earnings or that it's relying too heavily on debt to fund its operations. In Turners Automotive Group's case, the company's earnings growth has been relatively stable, but its debt-to-equity ratio is high at 147.9%. This combination of a high payout ratio and significant debt could indicate that the company is living beyond its means, potentially putting its dividend at risk.
Moreover, Turners Automotive Group's dividend yield, while attractive, is not the highest in its industry. The company's dividend yield is higher than the bottom 25% of dividend payers in the Australian market but lower than the top 25%. This suggests that while Turners Automotive Group's dividend is attractive, there are other companies offering higher yields.
In conclusion, while Turners Automotive Group's dividend yield is attractive, investors should be cautious about relying too heavily on this metric alone. The company's high payout ratio and significant debt could indicate that its dividend is at risk, and its dividend yield is not the highest in its industry. As always, it's essential to conduct thorough research and consider multiple factors before making an investment decision. Don't be swayed by the allure of a high dividend yield alone; consider the company's financial health, earnings growth, and debt levels as well.
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