Stock Analysis

EQB's (TSE:EQB) Shareholders Will Receive A Bigger Dividend Than Last Year

TSX:EQB
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EQB Inc. (TSE:EQB) has announced that it will be increasing its dividend from last year's comparable payment on the 30th of December to CA$0.33. This takes the annual payment to 2.4% of the current stock price, which unfortunately is below what the industry is paying.

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EQB's Dividend Forecasted To Be Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable.

EQB has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, EQB's payout ratio sits at 12%, an extremely comfortable number that shows that it can pay its dividend.

The next 3 years are set to see EPS grow by 42.3%. The future payout ratio could be 16% over that time period, according to analyst estimates, which is a good look for the future of the dividend.

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TSX:EQB Historic Dividend November 13th 2022

EQB Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was CA$0.24 in 2012, and the most recent fiscal year payment was CA$1.32. This means that it has been growing its distributions at 19% per annum over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that EQB has grown earnings per share at 11% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

An additional note is that the company has been raising capital by issuing stock equal to 10% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

We Really Like EQB's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 2 warning signs for EQB (of which 1 is a bit concerning!) you should know about. 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.