Decisive Dividend (CVE:DE) Is Due To Pay A Dividend Of CA$0.045

Decisive Dividend Corporation (CVE:DE) has announced that it will pay a dividend of CA$0.045 per share on the 13th of February. This makes the dividend yield 7.7%, which will augment investor returns quite nicely.

We’ve found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

Decisive Dividend’s Projections Indicate Future Payments May Be Unsustainable

Impressive dividend yields are good, but this doesn’t matter much if the payments can’t be sustained. Prior to this announcement, the company was paying out 187% of what it was earning and 77% of cash flows. This indicates that the company could be more focused on returning cash to shareholders than reinvesting to grow the business.

Earnings per share is forecast to rise by 49.8% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 137%, which probably can’t continue without putting some pressure on the balance sheet.

See our latest analysis for Decisive Dividend

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was CA$0.24 in 2016, and the most recent fiscal year payment was CA$0.54. This implies that the company grew its distributions at a yearly rate of about 8.4% over that duration. We like to see dividends have grown at a reasonable rate, but with at least one substantial cut in the payments, we’re not certain this dividend stock would be ideal for someone intending to live on the income.

Decisive Dividend’s Dividend Might Lack Growth

With a relatively unstable dividend, it’s even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Decisive Dividend has seen EPS rising for the last five years, at 20% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Decisive Dividend’s Dividend Doesn’t Look Sustainable

Overall, we don’t think this company makes a great dividend stock, even though the dividend wasn’t cut this year. Strong earnings growth means Decisive Dividend has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We don’t think Decisive Dividend is a great stock to add to your portfolio if income is your focus.

It’s important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Decisive Dividend has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about. Is Decisive Dividend not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.