SSC Security Services (CVE:SECU) Will Pay A Dividend Of CA$0.03

SSC Security Services Corp. (CVE:SECU) has announced that it will pay a dividend of CA$0.03 per share on the 15th of July. This means the annual payment is 4.5% of the current stock price, which is above the average for the industry.

Check out our latest analysis for SSC Security Services

SSC Security Services 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. Prior to this announcement, the company was paying out 201% of what it was earning. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

Over the next year, EPS could expand by 40.5% if the company continues along the path it has been on recently. If the dividend continues on its recent course, the payout ratio in 12 months could be 284%, which is a bit high and could start applying pressure to the balance sheet.

SSC Security Services Doesn't Have A Long Payment History

The dividend's track record has been pretty solid, but with only 7 years of history we want to see a few more years of history before making any solid conclusions. The payments haven't really changed that much since 7 years ago. It's good to see at least some dividend growth. Yet with a relatively short dividend paying history, we wouldn't want to depend on this dividend too heavily.

SSC Security Services Might Find It Hard To Grow Its Dividend

The company's investors will be pleased to have been receiving dividend income for some time. It's encouraging to see that SSC Security Services has been growing its earnings per share at 40% a year over the past five years. While EPS is growing rapidly, SSC Security Services paid out a very high 201% of its income as dividends. If earnings continue to grow, this dividend may be sustainable, but we think a payout this high definitely bears watching.

SSC Security Services' 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. 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. Overall, we don't think this company has the makings of a good income stock.

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, SSC Security Services has 2 warning signs (and 1 which can't be ignored) we think you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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