Bridgemarq Real Estate Services' (TSE:BRE) Dividend Will Be CA$0.1125

The board of Bridgemarq Real Estate Services Inc. (TSE:BRE) has announced that it will pay a dividend on the 30th of June, with investors receiving CA$0.1125 per share. This makes the dividend yield 9.1%, which will augment investor returns quite nicely.

Check out our latest analysis for Bridgemarq Real Estate Services

Bridgemarq Real Estate Services Is Paying Out More Than It Is Earning

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Earnings per share could rise by 1.3% over the next year if things go the same way as they have for the last few years. Assuming the dividend continues along recent trends, we think the payout ratio could reach 110%, which probably can't continue without starting to put some pressure on the balance sheet.

Bridgemarq Real Estate Services Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2013, the annual payment back then was CA$1.1, compared to the most recent full-year payment of CA$1.35. This works out to be a compound annual growth rate (CAGR) of approximately 2.0% a year over that time. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Dividend Growth May Be Hard To Achieve

Investors could be attracted to the stock based on the quality of its payment history. Bridgemarq Real Estate Services hasn't seen much change in its earnings per share over the last five years. So the company has struggled to grow its EPS yet it's still paying out 111% of its earnings. Limited recent earnings growth and a high payout ratio makes it hard for us to envision strong future dividend growth, unless the company should have substantial pricing power or some form of competitive advantage.

The Dividend Could Prove To Be Unreliable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Bridgemarq Real Estate Services' payments, as there could be some issues with sustaining them into the future. Although they have been consistent in the past, we think the payments are a little high to be sustained. Overall, we don't think this company has the makings of a good income stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. For example, we've picked out 4 warning signs for Bridgemarq Real Estate Services that investors should know about before committing capital to this stock. 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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