Patria Investments' (NASDAQ:PAX) Dividend Will Be Reduced To $0.169

Patria Investments Limited (NASDAQ:PAX) is reducing its dividend from last year's comparable payment to $0.169 on the 16th of September. The dividend yield of 5.5% is still a nice boost to shareholder returns, despite the cut.

View our latest analysis for Patria Investments

Patria Investments' Dividend Is Well Covered By Earnings

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. It will be difficult to sustain this level of payout so we wouldn't be confident about this continuing.

Over the next year, EPS is forecast to expand by 68.1%. If the dividend continues along recent trends, we estimate the payout ratio will be 66%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.

Patria Investments Is Still Building Its Track Record

It's not possible for us to make a backward looking judgement just based on a short payment history. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.

Patria Investments' Dividend Might Lack Growth

The company's investors will be pleased to have been receiving dividend income for some time. Patria Investments has impressed us by growing EPS at 18% per year over the past five years. While EPS is growing at a decent rate, but future growth could be limited by the amount of earnings being paid out to shareholders.

Patria Investments' Dividend Doesn't Look Sustainable

In summary, dividends being cut isn't ideal, however it can bring the payment into a more sustainable range. In general, the distributions are a little bit higher than we would like, but we can't ignore the fact the quickly growing earnings gives this stock great potential in the future. We don't think Patria Investments is a great stock to add to your portfolio if income is your focus.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Case in point: We've spotted 2 warning signs for Patria Investments (of which 1 can't be ignored!) you should know about. Is Patria Investments not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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