Findev (CVE:FDI) Is Due To Pay A Dividend Of CA$0.0075

Findev Inc.'s (CVE:FDI) investors are due to receive a payment of CA$0.0075 per share on 18th of July. This makes the dividend yield 7.6%, which will augment investor returns quite nicely.

View our latest analysis for Findev

Findev's Payment Has Solid Earnings Coverage

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The last payment was quite easily covered by earnings, but it made up 97% of cash flows. The company might be more focused on returning cash to shareholders, but paying out this much of its cash flow could expose the dividend to being cut in the future.

Looking forward, earnings per share could rise by 0.5% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 60% by next year, which we think can be pretty sustainable going forward.

Findev Doesn't Have A Long Payment History

It is great to see that Findev has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The payments haven't really changed that much since 7 years ago. Findev hasn't been paying a dividend for very long, so we wouldn't get to excited about its record of growth just yet.

Dividend Growth May Be Hard To Achieve

The company's investors will be pleased to have been receiving dividend income for some time. Although it's important to note that Findev's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time. Findev is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While Findev is earning enough to cover the payments, the cash flows are lacking. We don't think Findev is a great stock to add to your portfolio if income is your focus.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Just as an example, we've come across 6 warning signs for Findev you should be aware of, and 2 of them are potentially serious. 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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