Yahoo Finance Dominion Lending Centres' (TSE:DLCG) Dividend Will Be CA$0.03
The board of Dominion Lending Centres Inc. (TSE:DLCG) has announced that it will pay a dividend on the 15th of March, with investors receiving CA$0.03 per share. The dividend yield will be 4.5% based on this payment which is still above the industry average.
View our latest analysis for Dominion Lending Centres
Dominion Lending Centres 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. Based on the last payment, earnings were actually smaller than the dividend, and the company was actually spending more cash than it was making. This high of a dividend payment could start to put pressure on the balance sheet in the future.
Over the next year, EPS is forecast to expand by 99.9%. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.
Dominion Lending Centres' Dividend Has Lacked Consistency
It's comforting to see that Dominion Lending Centres has been paying a dividend for a number of years now, however it has been cut at least once in that time. This suggests that the dividend might not be the most reliable. Since 2017, the dividend has gone from CA$0.05 total annually to CA$0.12. This works out to be a compound annual growth rate (CAGR) of approximately 13% a year over that time. Despite the rapid growth in the dividend over the past number of years, we have seen the payments go down the past as well, so that makes us cautious.
Dominion Lending Centres' Dividend Might Lack Growth
Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. It's encouraging to see that Dominion Lending Centres has been growing its earnings per share at 39% a year over the past five years. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.
The Dividend Could Prove To Be Unreliable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Strong earnings growth means Dominion Lending Centres has the potential to be a good dividend stock in the future, despite the current payments being at elevated levels. We would be a touch cautious of relying on this stock primarily for the dividend income.
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. Case in point: We've spotted 4 warning signs for Dominion Lending Centres (of which 2 shouldn't be ignored!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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