Firm Capital Mortgage Investment's (TSE:FC) Dividend Will Be CA$0.092

Firm Capital Mortgage Investment Corporation (TSE:FC) will pay a dividend of CA$0.092 on the 16th of January. This means the annual payment is 8.8% of the current stock price, which is above the average for the industry.

See our latest analysis for Firm Capital Mortgage Investment

Firm Capital Mortgage Investment Will Pay Out More Than It Is Earning

A big dividend yield for a few years doesn't mean much if it can't be sustained.

Firm Capital Mortgage Investment has a long history of paying out dividends, with its current track record at a minimum of 10 years. While there are no guarantees that Firm Capital Mortgage Investment will always be able to pay out a dividend, the company's payout ratio sits at 99%. This is a sign that Firm Capital Mortgage Investment is barely covering its dividend.

If the company can't turn things around, EPS could fall by 2.0% over the next year. Analysts also estimate that the future payout ratio could reach 97% in 3 years, which would potentially make the dividend unsustainable.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. Since 2012, the dividend has gone from CA$0.99 total annually to CA$0.948. The dividend has shrunk at a rate of less than 1% a year over this period. A company that decreases its dividend over time generally isn't what we are looking for.

Firm Capital Mortgage Investment May Find It Hard To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Although it's important to note that Firm Capital Mortgage Investment's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

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

In summary, while it is good to see that the dividend hasn't been cut, we think that at current levels the payment isn't particularly sustainable. 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. The dividend doesn't inspire confidence that it will provide solid income in the future.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Firm Capital Mortgage Investment (1 is significant!) that you should be aware of before investing. Is Firm Capital Mortgage Investment not quite the opportunity you were looking for? Why not check out our selection of top 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.