Dexterra Group (TSE:DXT) Is Paying Out A Larger Dividend Than Last Year

The board of Dexterra Group Inc. (TSE:DXT) has announced that it will be increasing its dividend on the 17th of January to CA$0.087. This takes the dividend yield to 3.9%, which shareholders will be pleased with.

View our latest analysis for Dexterra Group

Dexterra Group's Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Based on the last payment, Dexterra Group's profits didn't cover the dividend, but the company was generating enough cash instead. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

Over the next year, EPS is forecast to expand by 48.3%. If the dividend continues along recent trends, we estimate the payout ratio will be 71%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Dexterra Group Doesn't Have A Long Payment History

The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

The Dividend's Growth Prospects Are Limited

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Although it's important to note that Dexterra Group's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.

Dexterra Group's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Dexterra Group's payments are rock solid. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. We don't think Dexterra Group is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 3 warning signs for Dexterra Group that investors should know about before committing capital to this stock. If you are a dividend investor, you might also want to look at our curated list of high performing dividend stock.

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