Park Lawn (TSE:PLC) Has Announced A Dividend Of CA$0.038

The board of Park Lawn Corporation (TSE:PLC) has announced that it will pay a dividend of CA$0.038 per share on the 15th of September. The dividend yield is 1.2% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Park Lawn

Park Lawn's Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Prior to this announcement, Park Lawn's dividend was comfortably covered by both cash flow and earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Looking forward, earnings per share could rise by 10.3% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 40% by next year, which is in a pretty sustainable range.

Park Lawn's Track Record Isn't Great

The dividend hasn't seen any major cuts in the last 10 years, but it has slowly been decreasing. The first annual payment during the last 10 years was CA$0.64 in 2011, and the most recent fiscal year payment was CA$0.46. The dividend has shrunk at around 3.3% 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.

The Dividend Looks Likely To Grow

With a relatively unstable dividend, it's even more important to evaluate if earnings per share is growing, which could point to a growing dividend in the future. Park Lawn has seen EPS rising for the last five years, at 10% per annum. Shareholders are getting plenty of the earnings returned to them, which combined with strong growth makes this quite appealing.

Park Lawn Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Park Lawn might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic 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 Park Lawn that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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