Dynacor Group (TSE:DNG) Is Due To Pay A Dividend Of $0.0117

The board of Dynacor Group Inc. (TSE:DNG) has announced that it will pay a dividend of $0.0117 per share on the 18th of April. This means the annual payment is 3.0% of the current stock price, which is above the average for the industry.

View our latest analysis for Dynacor Group

Dynacor Group's Earnings Easily Cover The Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, Dynacor Group was paying only paying out a fraction of earnings, but the payment was a massive 107% of cash flows. While the business may be attempting to set a balanced dividend policy, a cash payout ratio this high might expose the dividend to being cut if the business ran into some challenges.

Over the next year, EPS could expand by 27.7% if recent trends continue. If the dividend continues on this path, the payout ratio could be 31% by next year, which we think can be pretty sustainable going forward.

Dynacor Group Is Still Building Its Track Record

The dividend's track record has been pretty solid, but with only 6 years of history we want to see a few more years of history before making any solid conclusions. The annual payment during the last 6 years was $0.0301 in 2018, and the most recent fiscal year payment was $0.103. This implies that the company grew its distributions at a yearly rate of about 23% over that duration. Dynacor Group has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

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 28% per year over the past five years. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.

Our Thoughts On Dynacor Group's Dividend

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Dynacor Group's payments, as there could be some issues with sustaining them into the future. While the low payout ratio is a redeeming feature, this is offset by the minimal cash to cover the payments. This company is not in the top tier of income providing stocks.

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. For instance, we've picked out 2 warning signs for Dynacor Group that investors should take into consideration. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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