SSC Security Services (CVE:SECU) Is Due To Pay A Dividend Of CA$0.03

SSC Security Services Corp. (CVE:SECU) will pay a dividend of CA$0.03 on the 15th of April. This means the annual payment is 5.4% of the current stock price, which is above the average for the industry.

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Estimates Indicate SSC Security Services’ Could Struggle to Maintain Dividend Payments In The Future

If the payments aren’t sustainable, a high yield for a few years won’t matter that much. Prior to this announcement, the company was paying out 798% of what it was earning. It will be difficult to sustain this level of payout so we wouldn’t be confident about this continuing.

If the company can’t turn things around, EPS could fall by 30.3% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 1,137%, which could put the dividend in jeopardy if the company’s earnings don’t improve.

See our latest analysis for SSC Security Services

SSC Security Services Doesn’t Have A Long Payment History

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The most recent annual payment of CA$0.12 is about the same as the annual payment 9 years ago. We like that the dividend hasn’t been shrinking. However we’re conscious that the company hasn’t got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

The Dividend Has Limited Growth Potential

Investors could be attracted to the stock based on the quality of its payment history. Let’s not jump to conclusions as things might not be as good as they appear on the surface. Over the past five years, it looks as though SSC Security Services’ EPS has declined at around 30% a year. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.

We’re Not Big Fans Of SSC Security Services’ Dividend

In summary, while it is good to see that the dividend hasn’t been cut, we think that at current levels the payment isn’t particularly sustainable. The company’s earnings aren’t high enough to be making such big distributions, and it isn’t backed up by strong growth or consistency either. The dividend doesn’t inspire confidence that it will provide solid income in the future.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we’ve identified 3 warning signs for SSC Security Services (1 can’t be ignored!) that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.