Third Age Health Services Increases Dividend to NZ$0.0398, Boosting Yield to 3.1%

Third Age Health Services (NZSE:TAH) is increasing its dividend to NZ$0.0398, with a yield of 3.1%. The company's earnings are easily covering the distribution, and it is generating plenty of cash. If the trend continues, EPS will grow by 17.2% over the next 12 months, with a payout ratio of 59% by next year, considered sustainable. The dividend has lacked consistency in the past, but growing earnings per share could be a mitigating factor.

Third Age Health Services Limited (NZSE:TAH) has announced an increase in its dividend, effective from June 26, 2025. The dividend will be NZ$0.0398, up from last year's comparable payment, resulting in a dividend yield of 3.1%. This increase is a positive signal for shareholders, as it demonstrates the company's commitment to returning capital to investors.

The company's earnings are well-covered by the distribution, with the latest dividend easily supported by Third Age Health Services' earnings. This indicates a robust financial position, with plenty of cash available for reinvestment in the business. The company has been growing its earnings per share (EPS) at a rate of 17.2% over the past five years, which bodes well for future growth.

The payout ratio, which is the proportion of earnings paid out as dividends, is expected to reach 59% by next year, if the current trend continues. This is considered a sustainable range, indicating that the company can continue to pay dividends without compromising its growth prospects. However, it is important to note that the dividend has lacked consistency in the past, with fluctuations in annual payments over the last four years [1].

Despite this inconsistency, the growing EPS could mitigate the risk of future dividend cuts. Third Age Health Services has demonstrated a strong commitment to returning earnings to shareholders, with a focus on growth. The company's dividend policy is aligned with its long-term strategy of reinvesting in the business to drive growth.

Investors should be aware of the risks associated with the company's dividend policy. The dividend has been cut at least once in the past, and companies that cut once often cut again. Therefore, investors should consider other factors, such as the company's financial health and growth prospects, when analyzing Third Age Health Services as a potential investment [2].

In conclusion, Third Age Health Services' increase in dividend is a positive development for shareholders. The company's strong financial position, growing EPS, and sustainable payout ratio make it an attractive option for dividend investors. However, investors should be cautious and consider all relevant factors before making a decision.

References:
[1] https://finance.yahoo.com/news/third-age-health-services-nzse-005614895.html
[2] https://finance.yahoo.com/news/third-age-health-services-full-215224800.html