To determine if Shutterstock Inc.'s (SSTK) cash flow covers its dividend, we need to assess the company’s free cash flow (FCF) relative to its dividend payments. Free cash flow is calculated as operating cash flow minus capital expenditures, and it represents the cash available for dividends, share buybacks, or debt repayment after funding operations and investments. The dividend coverage is typically evaluated by comparing FCF to the total dividend payout. A payout ratio (dividends divided by FCF) below 100% suggests that dividends are sustainable, while a ratio above 100% indicates the company may be using other sources of cash (e.g., debt or reserves) to fund dividends, which could be a concern for long-term sustainability.
Dividend Information - Annual Dividend per Share: SSTK pays a quarterly dividend of $0.33 per share, which annualizes to $1.32 per share ($0.33 × 4).
- Total Dividend Payout: With approximately 35.47 million shares outstanding (derived from market cap of $770.14 million ÷ current share price of $21.71), the total annual dividend payout is roughly $1.32 × 35.47 million = $46.82 million.
Cash Flow Analysis Unfortunately, the provided data does not include specific figures for SSTK’s free cash flow or operating cash flow for the most recent trailing twelve months (TTM) or fiscal year 2024. However, we can use available information and insights from the web results to evaluate the situation:
- Concerns About Cash Flow Coverage: According to one source, SSTK paid out more in dividends than it generated in free cash flow last year, with a cash flow payout ratio of 148%, which is concerningly high. This indicates that the company’s free cash flow was insufficient to cover the dividend, and it likely relied on other sources of cash (e.g., cash reserves, debt, or asset sales) to fund the dividend payments.
- Earnings Coverage: The same source notes that SSTK’s earnings payout ratio (dividends divided by earnings) is more reasonable at 42%, suggesting that while earnings cover the dividend, the conversion of earnings to cash flow is a bottleneck. Another source reports a higher earnings payout ratio of 68.7%, which is still sustainable but less conservative.
- Recent Financial Performance: Shutterstock reported record revenues and adjusted EBITDA in 2024, with its Content business growing 3% year-over-year and its Data, Distribution, and Services business growing at double-digit rates. However, a decrease in cash flow was noted due to working capital changes and timing of operating expense payments. This suggests potential cash flow volatility, which could impact dividend coverage.
- Historical Context: Another source indicates that SSTK’s dividend payout ratio based on earnings per share (EPS) was 110.8% in the past year, with an annual dividend of $0.93 per share and EPS of $1.11. This high ratio further supports the concern that cash flow may not fully cover dividends, as earnings are not being fully converted to cash.
Additional Considerations - Dividend Sustainability: Despite the high cash flow payout ratio, SSTK has increased its dividend for four consecutive years, with a 5-year dividend growth rate of 14.19% and a current yield of approximately 6.31% to 6.57%. This suggests management’s confidence in maintaining dividends, possibly supported by a strong balance sheet (noted to hold more cash than debt).
- Strategic Investments: Shutterstock’s acquisition of Envato and investments in generative AI and partnerships (e.g., NVIDIA, Databricks) may be consuming cash, potentially explaining the high cash flow payout ratio. These investments could drive future growth, improving cash flow over time.
- Share Buybacks and Other Cash Uses: In 2024, SSTK spent $42.4 million on dividends and $41.6 million on share repurchasing, indicating significant cash outflows beyond dividends. This could further strain free cash flow available for dividends.
Conclusion Based on the available data, Shutterstock’s free cash flow does not fully cover its dividend payments, as evidenced by a cash flow payout ratio of 148% in the past year. While earnings appear to cover the dividend (with an earnings payout ratio of 42%–68.7%), the inability to convert earnings into sufficient free cash flow raises concerns about the long-term sustainability of the current dividend level without relying on other funding sources. However, Shutterstock’s consistent dividend growth, solid balance sheet, and strategic investments suggest that management is prioritizing shareholder returns and anticipates improved cash flows in the future.
For a definitive assessment, investors should review SSTK’s most recent cash flow statement (e.g., from the 2024 annual report or Q3 2025 quarterly report) to confirm the exact free cash flow figures. Given the high cash flow payout ratio, caution is warranted, and continuous monitoring of SSTK’s financial health is advisable.
If you’d like me to dig deeper into SSTK’s cash flow statements (if available) or analyze specific quarters, please let me know! |
