Firm Capital Mortgage Investment (TSE:FC) Is Due To Pay A Dividend Of CA$0.078

Firm Capital Mortgage Investment Corporation (TSE:FC) will pay a dividend of CA$0.078 on the 15th of December. This makes the dividend yield 7.9%, which will augment investor returns quite nicely.

Check out the opportunities and risks within the CA Mortgage industry.

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

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable.

Firm Capital Mortgage Investment has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. Although the company has a long history in paying out dividends, Firm Capital Mortgage Investment's latest earnings report shows a payout ratio of 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. The future payout ratio is also estimated by analysts to be at 97% in 3 years, which is definitely a bit high to be sustainable going forward.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2012, the dividend has gone from CA$0.99 total annually to CA$0.948. 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.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. 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, while some might be pleased that the dividend wasn't cut, we think this may help Firm Capital Mortgage Investment make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. The dividend doesn't inspire confidence that it will provide solid income in the future.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 2 warning signs for Firm Capital Mortgage Investment you should be aware of, and 1 of them is concerning. 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.