Do These 3 Checks Before Buying Bridgemarq Real Estate Services Inc. (TSE:BRE) For Its Upcoming Dividend

By
Simply Wall St
Published
July 24, 2021
TSX:BRE
Source: Shutterstock

Readers hoping to buy Bridgemarq Real Estate Services Inc. (TSE:BRE) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before a company's record date, which is the date on which the company determines which shareholders are entitled to receive a dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. This means that investors who purchase Bridgemarq Real Estate Services' shares on or after the 29th of July will not receive the dividend, which will be paid on the 31st of August.

The company's next dividend payment will be CA$0.11 per share. Last year, in total, the company distributed CA$1.35 to shareholders. Looking at the last 12 months of distributions, Bridgemarq Real Estate Services has a trailing yield of approximately 8.1% on its current stock price of CA$16.61. If you buy this business for its dividend, you should have an idea of whether Bridgemarq Real Estate Services's dividend is reliable and sustainable. We need to see whether the dividend is covered by earnings and if it's growing.

Check out our latest analysis for Bridgemarq Real Estate Services

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Bridgemarq Real Estate Services paid a dividend last year despite being unprofitable. This might be a one-off event, but it's not a sustainable state of affairs in the long run. Given that the company reported a loss last year, we now need to see if it generated enough free cash flow to fund the dividend. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out more than half (66%) of its free cash flow in the past year, which is within an average range for most companies.

Click here to see how much of its profit Bridgemarq Real Estate Services paid out over the last 12 months.

historic-dividend
TSX:BRE Historic Dividend July 24th 2021

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. Bridgemarq Real Estate Services was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Bridgemarq Real Estate Services's dividend payments are broadly unchanged compared to where they were 10 years ago.

Get our latest analysis on Bridgemarq Real Estate Services's balance sheet health here.

The Bottom Line

Is Bridgemarq Real Estate Services an attractive dividend stock, or better left on the shelf? First, it's not great to see the company paying a dividend despite being loss-making over the last year. On the plus side, the dividend was covered by free cash flow." It's not that we think Bridgemarq Real Estate Services is a bad company, but these characteristics don't generally lead to outstanding dividend performance.

With that being said, if you're still considering Bridgemarq Real Estate Services as an investment, you'll find it beneficial to know what risks this stock is facing. To help with this, we've discovered 4 warning signs for Bridgemarq Real Estate Services (3 shouldn't be ignored!) that you ought to be aware of before buying the shares.

A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.

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This article by Simply Wall St is general in nature. 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.
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