Pulse Seismic (TSE:PSD) Is Increasing Its Dividend To CA$0.0138

The board of Pulse Seismic Inc. (TSE:PSD) has announced that it will be paying its dividend of CA$0.0138 on the 24th of May, an increased payment from last year's comparable dividend. This takes the annual payment to 3.0% of the current stock price, which unfortunately is below what the industry is paying.

See our latest analysis for Pulse Seismic

Pulse Seismic Might Find It Hard To Continue The Dividend

Even a low dividend yield can be attractive if it is sustained for years on end. Even though Pulse Seismic isn't generating a profit, it is generating healthy free cash flows that easily cover the dividend. We generally think that cash flow is more important than accounting measures of profit, so we are fairly comfortable with the dividend at this level.

Over the next year, EPS could expand by 0.4% if recent trends continue. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. The positive free cash flows give us some comfort, however, that the dividend could continue to be sustained.

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$0.08 total annually to CA$0.055. The dividend has shrunk at around 3.7% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.

Dividend Growth May Be Hard To Achieve

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. Unfortunately, Pulse Seismic's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. With no profits, we don't think Pulse Seismic has much potential to grow the dividend in the future.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Pulse Seismic will make a great income stock. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. Overall, we don't think this company has the makings of a good income stock.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 2 warning signs for Pulse Seismic that investors need to be conscious of moving forward. Is Pulse Seismic 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.