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 on the 14th of April, with investors receiving CA$0.055 per share. Based on this payment, the dividend yield will be 1.3%, which is fairly typical for the industry.

See our latest analysis for Osisko Gold Royalties

Osisko Gold Royalties Might Find It Hard To Continue The Dividend

We aren't too impressed by dividend yields unless they can be sustained over time. Despite not generating a profit, Osisko Gold Royalties is still paying a dividend. It is also not generating any free cash flow, we definitely have concerns when it comes to the sustainability of the dividend.

Recent, EPS has fallen by 18.9%, so this could continue over the next year. 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

Even though the company has been paying a consistent dividend for a while, we would like to see a few more years before we feel comfortable relying on it. The dividend has gone from CA$0.12 in 2015 to the most recent annual payment of 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 been growing its dividend at a decent rate, and the payments have been stable. However, the payment history is very short, so there is no evidence yet that the dividend can be sustained over a full economic cycle.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. Osisko Gold Royalties' EPS has fallen by approximately 19% per year during the past 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.

We're Not Big Fans Of Osisko Gold Royalties' Dividend

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. The dividend doesn't inspire confidence that it will provide solid income in the future.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Osisko Gold Royalties that you should be aware of before investing. Is Osisko Gold Royalties not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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