Decisive Dividend (CVE:DE) Has Affirmed Its Dividend Of CA$0.045

The board of Decisive Dividend Corporation (CVE:DE) has announced that it will pay a dividend on the 15th of January, with investors receiving CA$0.045 per share. Based on this payment, the dividend yield on the company's stock will be 8.9%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Decisive Dividend

Decisive Dividend's Future Dividends May Potentially Be At Risk

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Prior to this announcement, the company was paying out 389% of what it was earning. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

The next 12 months is set to see EPS grow by 71.6%. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The annual payment during the last 10 years was CA$0.24 in 2014, and the most recent fiscal year payment was CA$0.54. This works out to be a compound annual growth rate (CAGR) of approximately 8.4% a year over that time. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Dividend Growth Could Be Constrained

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. We are encouraged to see that Decisive Dividend has grown earnings per share at 53% per year over the past five years. Although earnings per share is up nicely Decisive Dividend is paying out 389% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

Decisive Dividend's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 6 warning signs for Decisive Dividend (of which 2 are concerning!) you should know about. Is Decisive Dividend not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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