Decisive Dividend (CVE:DE) Is Paying Out A Dividend Of CA$0.045

Decisive Dividend Corporation (CVE:DE) has announced that it will pay a dividend of CA$0.045 per share on the 13th of June. This means the annual payment is 7.4% of the current stock price, which is above the average for the industry.

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Decisive Dividend's Future Dividends May Potentially Be At Risk

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the dividend made up 95% of cash flows, but a higher proportion of net income. While the cash payout ratio isn't necessarily a cause for concern, the company is probably focusing more on returning cash to shareholders than growing the business.

Over the next year, EPS is forecast to expand by 47.6%. Assuming the dividend continues along recent trends, we think the payout ratio could get very high, which probably can't continue without starting to put some pressure on the balance sheet.

Check out our latest analysis for Decisive Dividend

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. The dividend has gone from an annual total of CA$0.24 in 2015 to the most recent total annual payment of 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.

Decisive Dividend's Dividend Might Lack Growth

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Decisive Dividend has seen EPS rising for the last five years, at 30% per annum. Strong earnings is nice to see, but unless this can be sustained on minimal reinvestment of profits, we would question whether dividends will follow suit.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. 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. We would probably look elsewhere for an income investment.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. To that end, Decisive Dividend has 4 warning signs (and 2 which are significant) we think 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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