Tidewater Midstream and Infrastructure's (TSE:TWM) Dividend Will Be CA$0.01

The board of Tidewater Midstream and Infrastructure Ltd. (TSE:TWM) has announced that it will pay a dividend of CA$0.01 per share on the 28th of April. The dividend yield is 4.3% based on this payment, which is a little bit low compared to the other companies in the industry.

View our latest analysis for Tidewater Midstream and Infrastructure

Tidewater Midstream and Infrastructure's Dividend Is Well Covered By Earnings

If it is predictable over a long period, even low dividend yields can be attractive. Prior to this announcement, the dividend made up 175% of earnings, and the company was generating negative free cash flows. This high of a dividend payment could start to put pressure on the balance sheet in the future.

Analysts expect a massive rise in earnings per share in the next year. If the dividend continues along recent trends, we estimate the payout ratio will be 36%, which would make us comfortable with the dividend's sustainability, despite the levels currently being elevated.

Tidewater Midstream and Infrastructure Is Still Building Its Track Record

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 payments haven't really changed that much since 7 years ago. Modest dividend growth is good to see, especially with the payments being relatively stable. However, the payment history is relatively short and we wouldn't want to rely on this dividend too much.

Dividend Growth Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. However, things aren't all that rosy. Tidewater Midstream and Infrastructure's earnings per share has shrunk at 13% a year over the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. Over the next year, however, earnings are actually predicted to rise, but we would still be cautious until a track record of earnings growth can be built.

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.

We're Not Big Fans Of Tidewater Midstream and Infrastructure's Dividend

Overall, this isn't a great candidate as an income investment, even though the dividend was stable this year. The company's earnings aren't high enough to be making such big distributions, and it isn't backed up by strong growth or consistency either. We don't think that this is a great candidate to be an income stock.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 5 warning signs for Tidewater Midstream and Infrastructure you should be aware of, and 2 of them can't be ignored. Is Tidewater Midstream and Infrastructure not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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