Fiera Capital (TSE:FSZ) Has Affirmed Its Dividend Of CA$0.21

Fiera Capital Corporation (TSE:FSZ) has announced that it will pay a dividend of CA$0.21 per share on the 13th of June. Based on this payment, the dividend yield on the company's stock will be 9.0%, which is an attractive boost to shareholder returns.

Check out our latest analysis for Fiera Capital

Fiera Capital Doesn't Earn Enough To Cover Its Payments

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Fiera Capital's dividend was higher than its profits, but the free cash flows quite comfortably covered it. Generally, we think cash is more important than accounting measures of profit, so with the cash flows easily covering the dividend, we don't think there is much reason to worry.

Earnings per share is forecast to rise by 1.3% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could reach 170%, which probably can't continue putting some pressure on the balance sheet.

Fiera Capital Has A Solid Track Record

The company has an extended history of paying stable dividends. The dividend has gone from CA$0.32 in 2012 to the most recent annual payment of CA$0.86. This implies that the company grew its distributions at a yearly rate of about 10% over that duration. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.

Fiera Capital's Dividend Might Lack Growth

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Fiera Capital has seen EPS rising for the last five years, at 18% per annum. However, the payout ratio is very high, not leaving much room for growth of the dividend in the future.

Our Thoughts On Fiera Capital's Dividend

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 3 warning signs for Fiera Capital that you should be aware of before investing. 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.