Quálitas Controladora. de's (BMV:Q) Dividend Will Be MX$5.00

The board of Quálitas Controladora, S.A.B. de C.V. (BMV:Q) has announced that it will pay a dividend on the 7th of November, with investors receiving MX$5.00 per share. This will take the annual payment to 5.8% of the stock price, which is above what most companies in the industry pay.

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Quálitas Controladora. de's Future Dividend Projections Appear Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. The last payment was quite easily covered by earnings, but it made up 111% of cash flows. This signals that the company is more focused on returning cash flow to shareholders, but it could mean that the dividend is exposed to cuts in the future.

Over the next year, EPS is forecast to expand by 25.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 67%, which is in the range that makes us comfortable with the sustainability of the dividend.

See our latest analysis for Quálitas Controladora. de

Quálitas Controladora. de's Dividend Has Lacked Consistency

Quálitas Controladora. de 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. The annual payment during the last 9 years was MX$0.50 in 2016, and the most recent fiscal year payment was MX$10.00. This works out to be a compound annual growth rate (CAGR) of approximately 39% a year over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

Quálitas Controladora. de May Find It Hard To Grow The Dividend

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Quálitas Controladora. de hasn't seen much change in its earnings per share over the last five years.

Quálitas Controladora. de's Dividend Doesn't Look Sustainable

In summary, while it's always good to see the dividend being raised, we don't think Quálitas Controladora. de's payments are rock solid. 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. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 2 warning signs for Quálitas Controladora. de that investors need to be conscious of moving forward. Is Quálitas Controladora. de not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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