Stock Analysis

Atrium Mortgage Investment (TSE:AI) Is Paying Out A Dividend Of CA$0.075

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Atrium Mortgage Investment Corporation (TSE:AI) has announced that it will pay a dividend of CA$0.075 per share on the 12th of August. This means the annual payment is 8.4% of the current stock price, which is above the average for the industry.

View our latest analysis for Atrium Mortgage Investment

Atrium Mortgage Investment Not Expected To Earn Enough To Cover Its Payments

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.

Atrium Mortgage Investment has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Based on Atrium Mortgage Investment's last earnings report, the payout ratio is at a decent 90%, meaning that the company is able to pay out its dividend with a bit of room to spare.

The next 12 months is set to see EPS grow by 2.1%. Assuming the dividend continues along recent trends, we think the future payout ratio could reach 97%, which probably can't continue putting some pressure on the balance sheet.

TSX:AI Historic Dividend July 14th 2022

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The annual payment during the last 10 years was CA$0.83 in 2012, and the most recent fiscal year payment was CA$0.97. This implies that the company grew its distributions at a yearly rate of about 1.6% over that duration. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

Dividend Growth May Be Hard To Achieve

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Atrium Mortgage Investment hasn't seen much change in its earnings per share over the last five years.

Atrium Mortgage Investment's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The track record isn't great, and the payments are a bit high to be considered sustainable. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 1 warning sign for Atrium Mortgage Investment that investors should know about before committing capital to this stock. Is Atrium Mortgage Investment not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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