LifeWorks (TSE:LWRK) Has Affirmed Its Dividend Of CA$0.065

LifeWorks Inc. (TSE:LWRK) will pay a dividend of CA$0.065 on the 15th of June. This makes the dividend yield 2.3%, which will augment investor returns quite nicely.

View our latest analysis for LifeWorks

LifeWorks 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. Based on the last payment, LifeWorks' profits didn't cover the dividend, but the company was generating enough cash instead. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.

The next 12 months is set to see EPS grow by 92.6%. If the dividend continues on its recent course, the payout ratio in 12 months could be 104%, which is a bit high and could start applying pressure to the balance sheet.

LifeWorks Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from CA$0.94 in 2011 to the most recent annual payment of CA$0.78. The dividend has shrunk at around 1.9% a year during that period. Declining dividends isn't generally what we look for as they can indicate that the company is running into some challenges.

There Isn't Much Room To Grow The Dividend

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Earnings per share has been crawling upwards at 4.8% per year. With anaemic earnings growth, it's not confidence inspiring to see LifeWorks paying out more than double what it is earning. Meaning that on balance, the dividend is more likely to fall in the future than to grow.

Our Thoughts On LifeWorks' Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, which could maintain the dividend for a while, but the track record hasn't been great. 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. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 3 warning signs for LifeWorks (of which 1 doesn't sit too well with us!) you should know about. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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