Dynacor Group (TSE:DNG) Is Due To Pay A Dividend Of $0.0083

Dynacor Group Inc.'s (TSE:DNG) investors are due to receive a payment of $0.0083 per share on 19th of September. Based on this payment, the dividend yield will be 3.2%, which is fairly typical for the industry.

View our latest analysis for Dynacor Group

Dynacor Group's Earnings Easily Cover The Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, prior to this announcement, Dynacor Group's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

If the trend of the last few years continues, EPS will grow by 40.6% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 23% by next year, which is in a pretty sustainable range.

Dynacor Group Doesn't Have A Long Payment History

The dividend has been pretty stable looking back, but the company hasn't been paying one for very long. This makes it tough to judge how it would fare through a full economic cycle. The annual payment during the last 4 years was $0.03 in 2018, and the most recent fiscal year payment was $0.0756. This implies that the company grew its distributions at a yearly rate of about 26% over that duration. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. We are encouraged to see that Dynacor Group has grown earnings per share at 41% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

Dynacor Group Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think Dynacor Group might even raise payments in the future. Earnings are easily covering distributions, and the company is generating plenty of cash. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Taking the debate a bit further, we've identified 2 warning signs for Dynacor Group that investors need to be conscious of moving forward. Is Dynacor Group not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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