Will Kogan shares ever pay a dividend again?

SHARE Ltd (ASX: KGN) shares used to be a shining example of how an ASX tech share could give investors healthy dividend returns.

The e-commerce and online retail company spent the years between 2017 and 2020 ratcheting up its annual shareholder payouts from 7.7 cents per share to 21 cents per share.

Kogan then paid out its highest ever dividend in May 2021 – an interim dividend worth 16 cents per share.

But that, folks, is where the music stopped. All has been silent on the dividend front with Kogan since then. We are now well into the second half of 2022, and Kogan has yet to pay out any dividends of any kind since May 2021.

Where did Kogan’s dividend go?

Well, Kogan first broke the news of its upcoming dividend drought around this time last year. That was when the company reported its full-year earnings for the 2021 financial year. As we covered at the time, here’s how Kogan explained its decision to turn off the dividend tap: has a strong balance sheet, and attractive short-term and long-term growth opportunities. To support the Company with its growth plans, the Board has decided to conserve cash for business investment and growth purposes and has paused dividends – having not declared a FY21 final dividend.

Back in February of this year, Kogan delivered its half-year results for the first half of FY 2022. It said something remarkably similar then as well:

To support the company with its growth plans, the Board has decided to conserve cash for business investment and growth purposes and has paused dividends – having not declared a 1H FY22 interim dividend.

Now, Kogan is scheduled to deliver its full-year earnings for FY 2022 on 23 August. So it will be interesting whether the same lines get trotted out, or if dividend payments are finally resumed.

But looking at Kogan’s ‘business update’, which was released back on 28 July, things aren’t looking too good.

In a bit of a spoiler for its earnings later this month, Kogan flagged that it is looking at a total adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $19.1 million for the 2022 financial year.

That is a substantial step backwards from the $61.8 million in earnings the company reported for FY 2021. As well as the $49.7 million reported for FY 2020.

Will FY 2023 see the return of the Kogan dividend?

Profits also look likely to slip, with Kogan indicating it is set to report a total gross profit of $184.6 million for FY 2022, down from the $203.7 million for FY 2021.

But revenues are looking a little better. Kogan reported total revenue of $1.18 billion for FY 2022. That’s up slightly from FY 2021’s $1.179 billion for FY 2021.

Although shareholders love them, dividends are one of the least productive ways a company can spend its money, seeing as it gets no return whatsoever from paying out cash as dividends.

So the fact that it looks like Kogan is still struggling to grow earnings and profits arguably doesn’t bode well for a resumption of dividends later this month.

But we shall have to wait and see what happens on 23 August.

In the meantime, the last Kogan share price gives this ASX share a market capitalisation of $449.1 million.

Source: Read More

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