Black Diamond Group (TSE:BDI) Has Announced A Dividend Of CA$0.03

Black Diamond Group Limited (TSE:BDI) has announced that it will pay a dividend of CA$0.03 per share on the 15th of October. The dividend yield will be 1.3% based on this payment which is still above the industry average.

View our latest analysis for Black Diamond Group

Black Diamond Group's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Black Diamond Group was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Looking forward, earnings per share is forecast to fall by 6.8% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could be 20%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

Although the company has a long dividend history, it has been cut at least once in the last 10 years. The dividend has gone from an annual total of CA$0.84 in 2014 to the most recent total annual payment of CA$0.12. Dividend payments have fallen sharply, down 86% over that time. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

The Dividend Looks Likely To Grow

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Black Diamond Group has impressed us by growing EPS at 60% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

We Really Like Black Diamond Group's Dividend

Overall, we like to see the dividend staying consistent, and we think Black Diamond Group might even raise payments in the future. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For instance, we've picked out 1 warning sign for Black Diamond Group that investors should take into consideration. Is Black Diamond Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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