Pollard Banknote (TSE:PBL) Is Paying Out A Dividend Of CA$0.05

The board of Pollard Banknote Limited (TSE:PBL) has announced that it will pay a dividend on the 15th of October, with investors receiving CA$0.05 per share. This payment means the dividend yield will be 1.1%, which is below the average for the industry.

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Pollard Banknote's Payment Could Potentially Have Solid Earnings Coverage

If it is predictable over a long period, even low dividend yields can be attractive. Pollard Banknote is quite easily earning enough to cover the dividend, however it is being let down by weak cash flows. We think that cash flows should take priority over earnings, so this is definitely a worry for the dividend going forward.

Over the next year, EPS is forecast to expand by 33.7%. If the dividend continues on this path, the payout ratio could be 12% by next year, which we think can be pretty sustainable going forward.

Check out our latest analysis for Pollard Banknote

Pollard Banknote Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2015, the annual payment back then was CA$0.12, compared to the most recent full-year payment of CA$0.20. This means that it has been growing its distributions at 5.2% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Pollard Banknote has impressed us by growing EPS at 15% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Pollard Banknote's prospects of growing its dividend payments in the future.

Our Thoughts On Pollard Banknote's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Pollard Banknote's payments, as there could be some issues with sustaining them into the future. While Pollard Banknote is earning enough to cover the payments, the cash flows are lacking. We don't think Pollard Banknote is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Pollard Banknote that you should be aware of before investing. 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.