Inmobiliaria Manquehue (SNSE:MANQUEHUE) Has Affirmed Its Dividend Of CLP2.00

Inmobiliaria Manquehue S.A. (SNSE:MANQUEHUE) has announced that it will pay a dividend of CLP2.00 per share on the 5th of May. The dividend yield will be 4.9% based on this payment which is still above the industry average.

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Inmobiliaria Manquehue's Distributions May Be Difficult To Sustain

Impressive dividend yields are good, but this doesn't matter much if the payments can't be sustained. Before making this announcement, Inmobiliaria Manquehue was earning enough to cover the dividend, but it wasn't generating any free cash flows. No cash flows could definitely make returning cash to shareholders difficult, or at least mean the balance sheet will come under pressure.

Looking forward, earnings per share could rise by 21.6% over the next year if the trend from the last few years continues. While it is good to see income moving in the right direction, it still looks like the company won't achieve profitability. Unfortunately, for the dividend to continue at current levels the company definitely needs to get there sooner rather than later.

See our latest analysis for Inmobiliaria Manquehue

Inmobiliaria Manquehue's Dividend Has Lacked Consistency

Even in its relatively short history, the company has reduced the dividend at least once. Due to this, we are a little bit cautious about the dividend consistency over a full economic cycle. The annual payment during the last 6 years was CLP2.8 in 2019, and the most recent fiscal year payment was CLP4.50. This works out to be a compound annual growth rate (CAGR) of approximately 8.3% a year over that time. A reasonable rate of dividend growth is good to see, but we're wary that the dividend history is not as solid as we'd like, having been cut at least once.

The Dividend Looks Likely To Grow

Growing earnings per share could be a mitigating factor when considering the past fluctuations in the dividend. Inmobiliaria Manquehue has impressed us by growing EPS at 22% per year over the past five years. Inmobiliaria Manquehue is clearly able to grow rapidly while still returning cash to shareholders, positioning it to become a strong dividend payer in the future.

In Summary

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. With cash flows lacking, it is difficult to see how the company can sustain a dividend payment. This company is not in the top tier of income providing stocks.

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. Case in point: We've spotted 3 warning signs for Inmobiliaria Manquehue (of which 1 is a bit concerning!) you should know about. Is Inmobiliaria Manquehue not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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