Decisive Dividend (CVE:DE) Is Due To Pay A 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 August, with investors receiving CA$0.045 per share. This makes the dividend yield 7.7%, which will augment investor returns quite nicely.

View our latest analysis for Decisive Dividend

Decisive Dividend Is Paying Out More Than It Is Earning

If the payments aren't sustainable, a high yield for a few years won't matter that much. Prior to this announcement, the company was paying out 132% of what it was earning and 90% of cash flows. The company could be more focused on returning cash to shareholders, but this could indicate that growth opportunities are few and far between.

The next 12 months is set to see EPS grow by 32.4%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio reaching 119% over the next year.

Decisive Dividend's Dividend Has Lacked Consistency

It's comforting to see that Decisive Dividend has been paying a dividend for a number of years now, however it has been cut at least once in that time. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2015, the dividend has gone from CA$0.24 total annually to CA$0.54. This implies that the company grew its distributions at a yearly rate of about 9.4% over that duration. We have seen cuts in the past, so while the growth looks promising we would be a little bit cautious about its track record.

Decisive Dividend Might Find It Hard To Grow Its Dividend

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 148% per year over the past five years. Although earnings per share is up nicely Decisive Dividend is paying out 132% of its earnings as dividends, which we feel is borderline unsustainable without extenuating circumstances.

We should note that Decisive Dividend has issued stock equal to 11% of shares outstanding. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. Overall, we don't think this company has the makings of a good income stock.

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. Case in point: We've spotted 4 warning signs for Decisive Dividend (of which 1 is a bit concerning!) you should know about. 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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