Firm Capital Mortgage Investment's (TSE:FC) Dividend Will Be CA$0.078

Firm Capital Mortgage Investment Corporation's (TSE:FC) investors are due to receive a payment of CA$0.078 per share on 17th of April. This means the annual payment is 7.8% 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

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

Firm Capital Mortgage Investment has established itself as a dividend paying company with over 10 years history of distributing earnings to shareholders. 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 may be worrying, as it shows that Firm Capital Mortgage Investment is barely covering its dividend.

Looking forward, EPS could fall by 2.0% if the company can't turn things around from the last few years. Analysts also estimate that the future payout ratio could reach 102% in 3 years, which would potentially make the dividend unsustainable.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2013, the dividend has gone from CA$0.99 total annually to CA$0.95. The dividend has shrunk at a rate of less than 1% a year over this 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

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Unfortunately, Firm Capital Mortgage Investment's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.

Firm Capital Mortgage Investment's Dividend Doesn't Look Great

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 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. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Firm Capital Mortgage Investment has 2 warning signs (and 1 which is concerning) we think you should know about. 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.