Superior Group of Companies: Dividend Sustainability Under Scrutiny

Superior Group of Companies, Inc. (NASDAQ:SGC) is set to trade ex-dividend on August 18, with a dividend payment of $0.14 per share on August 29. The company's trailing yield is approximately 4.5% on its current stock price of $12.43. However, it has paid out more in dividends than it earned, with a payout ratio of 105%. Additionally, it paid out 61% of its free cash flow in the past year, which is within an average range for most companies. Nevertheless, investors should be cautious about the dividend's sustainability.

Superior Group of Companies, Inc. (NASDAQ:SGC) is set to trade ex-dividend on August 18, with a dividend payment of $0.14 per share scheduled for August 29. The company's trailing yield is approximately 4.5% on its current stock price of $12.43. However, it has paid out more in dividends than it earned, with a payout ratio of 105%. Additionally, it paid out 61% of its free cash flow in the past year, which is within an average range for most companies. Nevertheless, investors should be cautious about the dividend's sustainability.

In its latest quarterly report, SGC reported a robust second quarter (Q2) 2025, with revenue of $144 million, surpassing market expectations and marking a 9% year-over-year (YoY) increase. This growth was primarily driven by a 14% rise in the Branded Products segment, which led the company's performance [1].

CEO Michael Benstock highlighted improvements in client sentiment and the company's strategy to maximize market opportunities. He noted that the Branded Products segment has successfully managed economic ambiguity through market share gains and vendor negotiations [2]. The healthcare apparel segment also contributed to the growth, increasing revenues by 6% [1].

Despite a 3% decline in the Contact Center business due to macroeconomic headwinds and customer bankruptcies, SGC maintained a strong balance sheet, enabling strategic capital decisions. The company's net income per diluted share improved to $0.10, up from $0.04 in the same quarter last year [1].

SGC's CFO, Mike Campbell, expressed confidence in the company's revenue guidance for the year, despite ongoing uncertainties like tariffs. He noted that the company is working diligently to maintain momentum into the second half of the year [1].

The company is leveraging AI across its business segments to enhance efficiency and customer satisfaction, particularly in contact centers and branded products. AI tools like Google Guru are being used to improve agent efficiency and customer satisfaction, while AI agents are employed for product selection and mockups in the Branded Products segment [1].

Looking ahead, SGC expects to continue its growth trajectory, with the Branded Products segment leading the way. The company's strong liquidity and cost management position it well to adapt to fluctuating market conditions and invest in future expansion.

Superior Group of Companies, Inc. (NASDAQ:SGC - Get Free Report) recently reported earnings that exceeded expectations, driving a 7.0% increase in its stock price to $12.72 [2]. The company's strong performance in the Branded Products segment and its strategic use of AI to enhance efficiency are notable. However, investors should be cautious about the sustainability of the dividend payout given the high payout ratio and the significant portion of free cash flow paid out.

References:
[1] https://finance.yahoo.com/news/superior-group-companies-inc-sgc-073108287.html
[2] https://seekingalpha.com/news/4479435-superior-group-reiterates-550m-575m-revenue-guidance-as-branded-products-lead-14-percent