Imperial Equities' (CVE:IEI) Dividend Will Be CA$0.015

The board of Imperial Equities Inc. (CVE:IEI) has announced that it will pay a dividend on the 31st of January, with investors receiving CA$0.015 per share. This means the annual payment is 1.3% of the current stock price, which is above the average for the industry.

View our latest analysis for Imperial Equities

Imperial Equities' Dividend Is Well Covered By Earnings

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before making this announcement, Imperial Equities was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

If the trend of the last few years continues, EPS will grow by 9.7% over the next 12 months. If the dividend continues on this path, the payout ratio could be 7.8% by next year, which we think can be pretty sustainable going forward.

Imperial Equities' Dividend Has Lacked Consistency

Imperial Equities has been paying dividends for a while, but the track record isn't stellar. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. Since 2013, the first annual payment was CA$0.10, compared to the most recent full-year payment of CA$0.06. Doing the maths, this is a decline of about 5.5% per year. Generally, we don't like to see a dividend that has been declining over time as this can degrade shareholders' returns and indicate that the company may be running into problems.

Imperial Equities Could Grow Its Dividend

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Imperial Equities has impressed us by growing EPS at 9.7% per year over the past five years. Imperial Equities definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Imperial Equities Looks Like A Great Dividend Stock

Overall, we think that this is a great income investment, and we think that maintaining the dividend this year may have been a conservative choice. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 3 warning signs for Imperial Equities (of which 1 can't be ignored!) you should know about. We have also put together a list of global stocks with a solid dividend.

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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.