Evertz Technologies (TSE:ET) Is Paying Out A Dividend Of CA$0.195

Evertz Technologies Limited's (TSE:ET) investors are due to receive a payment of CA$0.195 per share on 10th of July. This means the annual payment is 6.3% of the current stock price, which is above the average for the industry.

See our latest analysis for Evertz Technologies

Evertz Technologies' Earnings Easily Cover The Distributions

A big dividend yield for a few years doesn't mean much if it can't be sustained. Before this announcement, Evertz Technologies was paying out 84% of earnings, but a comparatively small 44% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.

Earnings per share is forecast to rise by 5.2% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could reach 80%, which is on the higher side, but certainly still feasible.

Dividend Volatility

The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2014, the annual payment back then was CA$0.64, compared to the most recent full-year payment of CA$0.78. This means that it has been growing its distributions at 2.0% per annum over that time. We're glad to see the dividend has risen, but with a limited rate of growth and fluctuations in the payments the total shareholder return may be limited.

The Dividend's Growth Prospects Are Limited

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. However, Evertz Technologies' EPS was effectively flat over the past five years, which could stop the company from paying more every year.

In Summary

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Evertz Technologies' payments, as there could be some issues with sustaining them into the future. The payments haven't been particularly stable and we don't see huge growth potential, but with the dividend well covered by cash flows it could prove to be reliable over the short term. We would probably look elsewhere for an income investment.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For example, we've picked out 1 warning sign for Evertz Technologies that investors should know about before committing capital to this stock. Is Evertz Technologies not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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