Alaris Equity Partners Income Trust (TSE:AD.UN) Is Paying Out A Larger Dividend Than Last Year

Alaris Equity Partners Income Trust's (TSE:AD.UN) dividend will be increasing from last year's payment of the same period to CA$0.34 on 17th of July. This will take the dividend yield to an attractive 9.0%, providing a nice boost to shareholder returns.

Check out our latest analysis for Alaris Equity Partners Income Trust

Alaris Equity Partners Income Trust's Earnings Easily Cover The Distributions

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, Alaris Equity Partners Income Trust was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

EPS is set to fall by 8.6% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 62%, which we are pretty comfortable with and we think is feasible on an earnings basis.

Dividend Volatility

The company's dividend history has been marked by instability, with at least one cut in the last 10 years. Since 2013, the dividend has gone from CA$1.20 total annually to CA$1.36. This means that it has been growing its distributions at 1.3% per annum over that time. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.

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. We are encouraged to see that Alaris Equity Partners Income Trust has grown earnings per share at 29% per year over the past five years. Alaris Equity Partners Income Trust is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

Alaris Equity Partners Income Trust Looks Like A Great Dividend Stock

Overall, a dividend increase is always good, and we think that Alaris Equity Partners Income Trust is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for Alaris Equity Partners Income Trust you should be aware of, and 1 of them is concerning. 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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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.