Westshore Terminals Investment (TSE:WTE) Will Pay A Larger Dividend Than Last Year At CA$1.80

By
Simply Wall St
Published
March 23, 2022
TSX:WTE
Source: Shutterstock

Westshore Terminals Investment Corporation (TSE:WTE) will increase its dividend on the 15th of April to CA$1.80. This will take the annual payment from 3.6% to 7.5% of the stock price, which is above what most companies in the industry pay.

View our latest analysis for Westshore Terminals Investment

Westshore Terminals Investment Is Paying Out More Than It Is Earning

We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Westshore Terminals Investment was quite comfortably earning enough to cover the dividend. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

EPS is set to fall by 4.1% over the next 12 months. If the dividend continues along the path it has been on recently, the payout ratio in 12 months could be 140%, which is definitely a bit high to be sustainable going forward.

historic-dividend
TSX:WTE Historic Dividend March 23rd 2022

Westshore Terminals Investment Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2012, the first annual payment was CA$0.54, compared to the most recent full-year payment of CA$1.20. This implies that the company grew its distributions at a yearly rate of about 8.3% over that duration. The growth of the dividend has been pretty reliable, so we think this can offer investors some nice additional income in their portfolio.

Westshore Terminals Investment May Find It Hard To Grow The Dividend

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately, Westshore Terminals Investment's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. Westshore Terminals Investment is struggling to find viable investments, so it is returning more to shareholders. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like Westshore Terminals Investment's Dividend

In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The company is generating plenty of cash, and the earnings also quite easily cover the distributions. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Westshore Terminals Investment that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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