Stock Analysis

Decisive Dividend (CVE:DE) Is Paying Out A Dividend Of CA$0.03

TSXV:DE
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Decisive Dividend Corporation (CVE:DE) will pay a dividend of CA$0.03 on the 14th of October. Based on this payment, the dividend yield on the company's stock will be 7.9%, which is an attractive boost to shareholder returns.

View our latest analysis for Decisive Dividend

Decisive Dividend Doesn't Earn Enough To Cover Its Payments

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

EPS is set to grow by 7.8% over the next year if recent trends continue. Assuming the dividend continues along recent trends, we think the payout ratio could reach 132%, which probably can't continue without starting to put some pressure on the balance sheet.

historic-dividend
TSXV:DE Historic Dividend September 22nd 2022

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. If the company cuts once, it definitely isn't argument against the possibility of it cutting in the future. The annual payment during the last 7 years was CA$0.24 in 2015, and the most recent fiscal year payment was CA$0.36. This means that it has been growing its distributions at 6.0% per annum 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.

There Isn't Much Room To Grow The Dividend

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Decisive Dividend has seen EPS rising for the last five years, at 7.8% per annum. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.

Decisive Dividend's Dividend Doesn't Look Sustainable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The payments are bit high to be considered sustainable, and the track record isn't the best. This company is not in the top tier of income providing stocks.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. To that end, Decisive Dividend has 4 warning signs (and 2 which are concerning) we think 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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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.