Madison Pacific Properties (TSE:MPC) Is Paying Out A Dividend Of CA$0.0525

Madison Pacific Properties Inc.'s (TSE:MPC) investors are due to receive a payment of CA$0.0525 per share on 4th of September. This means the annual payment is 2.0% of the current stock price, which is above the average for the industry.

View our latest analysis for Madison Pacific Properties

Madison Pacific Properties Might Find It Hard To Continue The Dividend

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Even in the absence of profits, Madison Pacific Properties is 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 21.7%, so this could continue over the next year. 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

Even over a long history of paying dividends, the company's distributions have been remarkably stable. The most recent annual payment of CA$0.105 is about the same as the annual payment 10 years ago. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Limited Growth Potential

Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Unfortunately things aren't as good as they seem. Madison Pacific Properties' EPS has fallen by approximately 22% per year during the past five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future.

Madison Pacific Properties' Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Madison Pacific Properties' 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. We don't think Madison Pacific Properties 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. However, there are other things to consider for investors when analysing stock performance. For example, we've picked out 4 warning signs for Madison Pacific Properties that investors should know about before committing capital to this stock. Is Madison Pacific Properties not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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