Q: North West Health's dividend now yields 12.09%. Is this sustainable and if it is cut what potential impact will it have on the already low share price.
5i Research Answer:
NWH has tried to take several steps (asset sales and other) to shore up its capital base, but the recent failure of its UK Joint Venture worried investors. On June 7 the company said the venture 'will clos by June 30' and then on June 21 the deal ended. Suffice to say at a 12% yield many investors 'expect' a cut. Payout ratio even with asset sales could be 100% in 2024. A cut is likely on the way, and we would expect about a 10% hit, which may be short term, if one does occur. The stock hit of course will depend on the degree of reduction.