Keg Royalties Income Fund (TSE:KEG.UN) Is Paying Out A Dividend Of CA$0.0946

The Keg Royalties Income Fund's (TSE:KEG.UN) investors are due to receive a payment of CA$0.0946 per share on 30th of November. The dividend yield will be 8.3% based on this payment which is still above the industry average.

View our latest analysis for Keg Royalties Income Fund

Keg Royalties Income Fund's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. The last dividend was quite easily covered by Keg Royalties Income Fund's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, EPS could fall by 1.2% if the company can't turn things around from the last few years. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 58%, which is definitely feasible to continue.

Keg Royalties Income Fund Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The annual payment during the last 10 years was CA$0.96 in 2013, and the most recent fiscal year payment was CA$1.14. This implies that the company grew its distributions at a yearly rate of about 1.7% over that duration. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. However, things aren't all that rosy. Keg Royalties Income Fund hasn't seen much change in its earnings per share over the last five years.

Our Thoughts On Keg Royalties Income Fund's Dividend

In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. With shrinking earnings, the company may see some issues maintaining the dividend even though they look pretty sustainable for now. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.

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. For example, we've picked out 2 warning signs for Keg Royalties Income Fund that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.