Yahoo Finance Acadian Timber (TSE:ADN) Will Pay A Dividend Of CA$0.29
The board of Acadian Timber Corp. (TSE:ADN) has announced that it will pay a dividend on the 15th of April, with investors receiving CA$0.29 per share. This makes the dividend yield 6.9%, which will augment investor returns quite nicely.
See our latest analysis for Acadian Timber
Acadian Timber Is Paying Out More Than It Is Earning
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Acadian Timber's dividend was only 67% of earnings, however it was paying out 204% of free cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.
EPS is set to fall by 61.9% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 185%, which could put the dividend under pressure if earnings don't start to improve.
Acadian Timber Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from CA$0.825 total annually to CA$1.16. This works out to be a compound annual growth rate (CAGR) of approximately 3.5% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
The Dividend's Growth Prospects Are Limited
Investors could be attracted to the stock based on the quality of its payment history. Acadian Timber hasn't seen much change in its earnings per share over the last five years. Growth of 1.7% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
Our Thoughts On Acadian Timber's Dividend
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. Overall, we don't think this company has the makings of a good income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Acadian Timber (of which 1 is significant!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield 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.
