Alaris Equity Partners Income Trust (TSE:AD.UN) Has Announced A Dividend Of CA$0.34

The board of Alaris Equity Partners Income Trust (TSE:AD.UN) has announced that it will pay a dividend on the 15th of January, with investors receiving CA$0.34 per share. The dividend yield will be 7.2% based on this payment which is still above the industry average.

See our latest analysis for Alaris Equity Partners Income Trust

Alaris Equity Partners Income Trust's Projections Indicate Future Payments May Be Unsustainable

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. However, based ont he last payment, Alaris Equity Partners Income Trust was earning enough to cover the dividend pretty comfortably. However, with more than 75% of free cash flow being paid out to shareholders, future growth could potentially be constrained.

EPS is set to fall by 93.9% over the next 12 months. If the dividend continues along recent trends, we estimate the payout ratio could reach over 200%, which could put the dividend in jeopardy if the company's earnings don't improve.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2014, the annual payment back then was CA$1.44, compared to the most recent full-year payment of CA$1.36. Payments have been decreasing at a very slow pace in this time period. A company that decreases its dividend over time generally isn't what we are looking for.

The Dividend Looks Likely To Grow

Given that the dividend has been cut in the past, we need to check if earnings are growing and if that might lead to stronger dividends in the future. Alaris Equity Partners Income Trust has seen EPS rising for the last five years, at 17% per annum. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

Our Thoughts On Alaris Equity Partners Income Trust's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Alaris Equity Partners Income Trust's payments, as there could be some issues with sustaining them into the future. While Alaris Equity Partners Income Trust is earning enough to cover the dividend, we are generally unimpressed with its future prospects. This company is not in the top tier of income providing stocks.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. To that end, Alaris Equity Partners Income Trust has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. Is Alaris Equity Partners Income Trust not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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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.