It Might Not Be A Great Idea To Buy Bridgemarq Real Estate Services Inc. (TSE:BRE) For Its Next Dividend

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

Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Bridgemarq Real Estate Services Inc. (TSE:BRE) is about to trade ex-dividend in the next 4 days. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important because any transaction on a stock needs to have been settled before the record date in order to be eligible for a dividend. Meaning, you will need to purchase Bridgemarq Real Estate Services' shares before the 29th of November to receive the dividend, which will be paid on the 31st of December.

The company's next dividend payment will be CA$0.11 per share, and in the last 12 months, the company paid a total of CA$1.35 per share. Last year's total dividend payments show that Bridgemarq Real Estate Services has a trailing yield of 7.8% on the current share price of CA$17.34. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! That's why we should always check whether the dividend payments appear sustainable, and if the company is growing.

See our latest analysis for Bridgemarq Real Estate Services

Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. 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. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. 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 86% of its free cash flow as dividends, which is within usual limits but will limit the company's ability to lift the dividend if there's no growth.

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 November 24th 2021

Have Earnings And Dividends Been Growing?

Companies with falling earnings are riskier for dividend shareholders. If earnings fall far enough, the company could be forced to cut its dividend. 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 has seen its dividend decline 1.7% per annum on average over the past 10 years, which is not great to see.

Remember, you can always get a snapshot of Bridgemarq Real Estate Services's financial health, by checking our visualisation of its financial health, here.

To Sum It Up

From a dividend perspective, should investors buy or avoid Bridgemarq Real Estate Services? It's hard to get used to Bridgemarq Real Estate Services paying a dividend despite reporting a loss over the past year. At least the dividend was covered by free cash flow, however. Bottom line: Bridgemarq Real Estate Services has some unfortunate characteristics that we think could lead to sub-optimal outcomes for dividend investors.

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. For instance, we've identified 4 warning signs for Bridgemarq Real Estate Services (3 are a bit concerning) you should be aware of.

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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