Firm Capital Mortgage Investment (TSE:FC) Has Affirmed Its Dividend Of CA$0.078

The board of Firm Capital Mortgage Investment Corporation (TSE:FC) has announced that it will pay a dividend of CA$0.078 per share on the 15th of February. This means the annual payment is 8.5% of the current stock price, which is above the average for the industry.

View our latest analysis for Firm Capital Mortgage Investment

Firm Capital Mortgage Investment Not Expected To Earn Enough To Cover Its Payments

If the payments aren't sustainable, a high yield for a few years won't matter that much.

Firm Capital Mortgage Investment has a long history of paying out dividends, with its current track record at a minimum of 10 years. While having a long history of dividends is a good sign, Firm Capital Mortgage Investment's latest earning reports show that its payout ratio - the ratio of the dividend amount to earnings - currently sits at 99%. This figure could be worrying with regards to the sustainability of the company's dividends, as earnings just barely cover its dividend payments.

If the company can't turn things around, EPS could fall by 2.0% over the next year. Future analyst estimates of the payout ratio also put it at 97% in 3 years, which means they expect the dividend to be under pressure with weakened earnings forecasts.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2013, the dividend has gone from CA$0.99 total annually to CA$0.95. Payments have been decreasing at a very slow pace in this time period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

Dividend Growth May Be Hard To Achieve

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. However, Firm Capital Mortgage Investment's EPS was effectively flat over the past five years, which could stop the company from paying more every year.

We're Not Big Fans Of Firm Capital Mortgage Investment's Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. Overall, the dividend is not reliable enough to make this a good income stock.

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 Firm Capital Mortgage Investment that investors should know about before committing capital to this stock. 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.