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

SSC Security Services Corp. (CVE:SECU) will pay a dividend of CA$0.03 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.

See our latest analysis for SSC Security Services

SSC Security Services Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

EPS is set to grow by 40.4% over the next year if recent trends continue. If the dividend continues on its recent course, the payout ratio in 12 months could be 288%, which is a bit high and could start applying pressure to the balance sheet.

SSC Security Services Doesn't Have A Long Payment History

It is great to see that SSC Security Services has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The payments haven't really changed that much since 8 years ago. SSC Security Services hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

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. 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.

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. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We would probably look elsewhere for an income investment.

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 identified 3 warning signs for SSC Security Services (1 makes us a bit uncomfortable!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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