It Might Not Be A Great Idea To Buy Alaris Equity Partners Income Trust (TSE:AD.UN) For Its Next Dividend

Alaris Equity Partners Income Trust (TSE:AD.UN) is about to trade ex-dividend in the next 3 days. Ex-dividend means that investors that purchase the stock on or after the 30th of December will not receive this dividend, which will be paid on the 15th of January.

Alaris Equity Partners Income Trust's next dividend payment will be CA$0.31 per share, on the back of last year when the company paid a total of CA$1.24 to shareholders. Based on the last year's worth of payments, Alaris Equity Partners Income Trust has a trailing yield of 8.1% on the current stock price of CA$15.4. If you buy this business for its dividend, you should have an idea of whether Alaris Equity Partners Income Trust's dividend is reliable and sustainable. So we need to investigate whether Alaris Equity Partners Income Trust can afford its dividend, and if the dividend could grow.

See our latest analysis for Alaris Equity Partners Income Trust

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. Alaris Equity Partners Income Trust's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. Alaris Equity Partners Income Trust was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last 10 years, Alaris Equity Partners Income Trust has lifted its dividend by approximately 4.0% a year on average.

Get our latest analysis on Alaris Equity Partners Income Trust's balance sheet health here.

Final Takeaway

Is Alaris Equity Partners Income Trust an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. Worse, the general trend in its earnings looks negative in recent years. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.

With that in mind though, if the poor dividend characteristics of Alaris Equity Partners Income Trust don't faze you, it's worth being mindful of the risks involved with this business. For example, Alaris Equity Partners Income Trust has 4 warning signs (and 1 which is a bit unpleasant) we think you should know about.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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