Madison Pacific Properties (TSE:MPC) Has Affirmed Its Dividend Of CA$0.0525

Madison Pacific Properties Inc. (TSE:MPC) has announced that it will pay a dividend of CA$0.0525 per share on the 21st of February. This means the annual payment is 1.7% of the current stock price, which is above the average for the industry.

See our latest analysis for Madison Pacific Properties

Madison Pacific Properties' Distributions May Be Difficult To Sustain

If the payments aren't sustainable, a high yield for a few years won't matter that much. Madison Pacific Properties is not generating a profit, and despite this is paying out most of its free cash flow as a dividend. Paying a dividend while unprofitable is generally considered an aggressive policy, and with limited funds retained for reinvestment, growth may be slow.

Over the next year, EPS might fall by 1.4% based on recent performance. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

Madison Pacific Properties Has A Solid Track Record

The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. The most recent annual payment of CA$0.105 is about the same as the annual payment 10 years ago. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.

Madison Pacific Properties May Find It Hard To Grow The Dividend

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. Madison Pacific Properties hasn't seen much change in its earnings per share over the last five years.

Madison Pacific Properties' Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. We would be a touch cautious of relying on this stock primarily for the dividend income.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. For instance, we've picked out 3 warning signs for Madison Pacific Properties 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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