Our analysis is based on comparing Liberty Tax, Inc. with the following peers – PRGX Global, Inc., CBIZ, Inc., Intuit Inc., Automatic Data Processing, Inc., CoreLogic, Inc., H&R Block, Inc., Broadridge Financial Solutions, Inc. and Blucora, Inc. (PRGX-US, CBZ-US, INTU-US, ADP-US, CLGX-US, HRB-US, BR-US and BCOR-US).
Liberty Tax, Inc.’s dividend yield is 4.49 percent and its dividend payout is 61.54 percent. This compares to a peer median dividend yield of 2.17 percent and a payout level of 57.91 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s relatively low dividend quality score of 33 out of a possible score of 100 raises questions on the sustainability of its robust payout ratio.
Dividend Quality Overview
- Over the last twelve months (prior to January 31, 2017), TAX-US paid a high quality dividend, which represents a yield of 4.49% at the current price.
- Dividends were paid for 2 of the last five years — all of them were also of low quality.
- The ending cash balance is less than the last full year dividend payment and cannot be relied on to cushion any significant reduction of cash flows in the future.
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Over the last twelve months (prior to January 31, 2017), TAX-US paid a high quality dividend.
The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 4.05x), investing cash flow (coverage of -0.25x), issuance cash flow (coverage of -2.62x) and twelve-month prior cash (coverage of 0.20x), for a total dividend coverage of 1.39x.
TAX-US‘s issuance cash flow includes outflows from net debt repayment (coverage of -2.75x) and net share buybacks (coverage of -0.01x). Thus, the total coverage including share buybacks is 1.40x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.
These coverage ratio factors imply that the firm’s dividends are wholly paid from operating and investing cash flows net of any debt repayments, which suggests a high dividend quality.
|Dividend Yield (%)||N/A||0||0||0.62||5.7||4.49|
|Dividend Payout (%)||0||0||0||26.23||46.38||61.54|
A complete list of metrics and analysis is available on the company page.
Liberty Tax, Inc. operates as a holding company, which provides tax preparation services. It involves in providing retail federal and state income tax preparation services and related tax settlement products in the United States and Canada. The company was founded by John T. Hewitt in September 2010 and is headquartered in Virginia Beach, VA.
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