Bridgemarq Real Estate Services (TSE:BRE) Will Pay A Dividend Of CA$0.1125

The board of Bridgemarq Real Estate Services Inc. (TSE:BRE) has announced that it will pay a dividend on the 31st of May, with investors receiving CA$0.1125 per share. This means the annual payment is 9.9% of the current stock price, which is above the average for the industry.

See our latest analysis for Bridgemarq Real Estate Services

Bridgemarq Real Estate Services Doesn't Earn Enough To Cover Its Payments

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. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

If the company can't turn things around, EPS could fall by 25.5% over the next year. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 437%, which could put the dividend under pressure if earnings don't start to improve.

Bridgemarq Real Estate Services Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2014, the annual payment back then was CA$1.1, compared to the most recent full-year payment of CA$1.35. This implies that the company grew its distributions at a yearly rate of about 2.0% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth Potential Is Shaky

Investors could be attracted to the stock based on the quality of its payment history. Unfortunately things aren't as good as they seem. Bridgemarq Real Estate Services' EPS has fallen by approximately 25% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

An additional note is that the company has been raising capital by issuing stock equal to 23% of shares outstanding in the last 12 months. Trying to grow the dividend when issuing new shares reminds us of the ancient Greek tale of Sisyphus - perpetually pushing a boulder uphill. Companies that consistently issue new shares are often suboptimal from a dividend perspective.

The Dividend Could Prove To Be Unreliable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. In the past the payments have been stable, but we think the company is paying out too much for this to continue for the long term. We don't think Bridgemarq Real Estate Services is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've identified 6 warning signs for Bridgemarq Real Estate Services (4 are concerning!) that you should be aware of before investing. Is Bridgemarq Real Estate Services not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.