Osisko Gold Royalties (TSE:OR) Is Due To Pay A Dividend Of CA$0.055

The board of Osisko Gold Royalties Ltd (TSE:OR) has announced that it will pay a dividend of CA$0.055 per share on the 14th of April. This payment means that the dividend yield will be 1.4%, which is around the industry average.

See our latest analysis for Osisko Gold Royalties

Osisko Gold Royalties Might Find It Hard To Continue The Dividend

We like to see a healthy dividend yield, but that is only helpful to us if the payment can continue. Despite not generating a profit, Osisko Gold Royalties is still paying a dividend. Along with this, it is also not generating free cash flows, which raises concerns about the sustainability of the dividend.

Looking forward, earnings per share could 18.9% over the next year if the trend of the last few years can't be broken. This means the company won't be turning a profit, which could place managers in the tough spot of having to choose between suspending the dividend or putting more pressure on the balance sheet.

Osisko Gold Royalties Is Still Building Its Track Record

It is great to see that Osisko Gold Royalties has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The first annual payment during the last 7 years was CA$0.12 in 2015, and the most recent fiscal year payment was CA$0.22. This implies that the company grew its distributions at a yearly rate of about 9.0% over that duration. Osisko Gold Royalties has a nice track record of dividend growth but we would wait until we see a longer track record before getting too confident.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Earnings per share has been sinking by 19% over the last five years. A sharp decline in earnings per share is not great from from a dividend perspective. Even conservative payout ratios can come under pressure if earnings fall far enough.

Osisko Gold Royalties' Dividend Doesn't Look Great

Overall, while some might be pleased that the dividend wasn't cut, we think this may help Osisko Gold Royalties make more consistent payments in the future. The company isn't making enough to be paying as much as it is, and the other factors don't look particularly promising either. We don't think that this is a great candidate to be 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. 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 1 warning sign for Osisko Gold Royalties that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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