Tidewater Midstream and Infrastructure (TSE:TWM) Has Announced A Dividend Of CA$0.01

Tidewater Midstream and Infrastructure Ltd.'s (TSE:TWM) investors are due to receive a payment of CA$0.01 per share on 31st of July. The dividend yield is 4.6% based on this payment, which is a little bit low compared to the other companies in the industry.

See our latest analysis for Tidewater Midstream and Infrastructure

Tidewater Midstream and Infrastructure Doesn't Earn Enough To Cover Its Payments

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Even in the absence of profits, Tidewater Midstream and Infrastructure is paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.

The next 12 months is set to see EPS grow by 113.5%. However, if the dividend continues along recent trends, it could start putting pressure on the balance sheet with the payout ratio getting very high over the next year.

Tidewater Midstream and Infrastructure Doesn't Have A Long Payment History

Tidewater Midstream and Infrastructure's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The last annual payment of CA$0.04 was flat on the annual payment from8 years ago. We like that the dividend hasn't been shrinking. However we're conscious that the company hasn't got an overly long track record of dividend payments yet, which makes us wary of relying on its dividend income.

The Company Could Face Some Challenges Growing The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Tidewater Midstream and Infrastructure has seen EPS rising for the last five years, at 21% per annum. Even though the company is not profitable, it is growing at a solid clip. If profitability can be achieved soon and growth continues apace, this stock could certainly turn into a solid dividend payer.

An additional note is that the company has been raising capital by issuing stock equal to 24% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

The Dividend Could Prove To Be Unreliable

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While we generally think the level of distributions are a bit high, we wouldn't rule it out as becoming a good dividend payer in the future as its earnings are growing healthily. We don't think Tidewater Midstream and Infrastructure is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Tidewater Midstream and Infrastructure (of which 2 are a bit concerning!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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