Extendicare's (TSE:EXE) Dividend Will Be CA$0.042

Extendicare Inc.'s (TSE:EXE) investors are due to receive a payment of CA$0.042 per share on 15th of May. Based on this payment, the dividend yield will be 3.6%, which is fairly typical for the industry.

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Extendicare's Future Dividend Projections Appear Well Covered By Earnings

Solid dividend yields are great, but they only really help us if the payment is sustainable. The last dividend was quite easily covered by Extendicare's earnings. This means that a large portion of its earnings are being retained to grow the business.

Looking forward, earnings per share could rise by 40.3% over the next year if the trend from the last few years continues. If the dividend continues along recent trends, we estimate the payout ratio will be 40%, which is in the range that makes us comfortable with the sustainability of the dividend.

Check out our latest analysis for Extendicare

Extendicare Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The payments haven't really changed that much since 10 years ago. Dividends have grown relatively slowly, which is not great, but some investors may value the relative consistency of the dividend.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. Extendicare has impressed us by growing EPS at 40% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.

We Really Like Extendicare's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an 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. As an example, we've identified 1 warning sign for Extendicare that you should be aware of before investing. Is Extendicare not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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