Perpetual to Pay $0.61 Dividend with 5.9% Yield

Perpetual Limited (ASX:PPT) announced a dividend of A$0.61 per share, yielding 5.9%. Despite not generating a profit, the company's free cash flow easily covers the dividend, and EPS is expected to rise significantly next year. However, the dividend has declined by 4.7% per year since 2015, and EPS has fallen by 58% over the past five years, which may indicate long-term challenges for the company's ability to pay a larger dividend in the future.

Perpetual Limited (ASX:PPT), an Australian diversified financial services company, recently announced an interim unfranked ordinary dividend of A$0.61 per share for the first half of 2025 [1]. This dividend yields 5.9%, making it an attractive investment for income-seeking investors. However, a closer look at Perpetual's financial performance raises questions about the sustainability of its dividend payouts.

Despite not generating a profit, Perpetual's free cash flow easily covers the dividend [1]. Moreover, earnings per share (EPS) are expected to rise significantly next year [1]. However, the dividend has declined by 4.7% per year since 2015 [1], and EPS has fallen by 58% over the past five years [1]. This contrast between the company's dividend yield and its financial performance may indicate long-term challenges for Perpetual's ability to pay a larger dividend in the future.

Perpetual's financial performance has been lackluster in recent years. In 2024, the company's full-year earnings missed analyst expectations [2]. Additionally, the company's revenues have not been sufficient for some investors [3]. These factors, combined with the decline in dividend growth, may suggest that Perpetual's financial health is not as strong as its dividend yield might suggest.

Furthermore, Perpetual's high payout ratio of -26% raises concerns about the company's ability to maintain its dividend payouts [1]. A negative payout ratio indicates that the company is paying out more in dividends than it is generating in earnings. This situation is unsustainable in the long term and may put pressure on the company to reduce its dividend payouts.

In conclusion, while Perpetual Limited's dividend yield of 5.9% may be attractive to income-seeking investors, a closer look at the company's financial performance raises concerns about its sustainability. The decline in dividend growth, combined with the company's lackluster financial performance and high payout ratio, may indicate long-term challenges for Perpetual's ability to pay a larger dividend in the future.

[1] Simplywall.st. (2025). Perpetual Limited Shares. https://simplywall.st/stocks/au/diversified-financials/asx-ppt/perpetual-shares/dividend
[2] Perpetual Limited. (2024). Full Year 2024 Earnings. https://www.perpetual.com.au/media/news/2024/perpetual-limited-reports-full-year-2024-earnings
[3] Yahoo Finance. (2022). Perpetual Limited (ASX:PPT). https://au.finance.yahoo.com/quote/ASX:PPT/news?p=ASX:PPT