Andrew Peller (TSE:ADW.A) Will Pay A Larger Dividend Than Last Year At CA$0.061
The board of Andrew Peller Limited (TSE:ADW.A) has announced that it will be increasing its dividend on the 7th of January to CA$0.061. This takes the dividend yield from 2.8% to 3.1%, which shareholders will be pleased with.
View our latest analysis for Andrew Peller
Andrew Peller's 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. Before making this announcement, Andrew Peller 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 is forecast to rise by 31.7% over the next year. If the dividend continues on this path, the payout ratio could be 42% by next year, which we think can be pretty sustainable going forward.
Andrew Peller Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from CA$0.11 in 2011 to the most recent annual payment of CA$0.22. This means that it has been growing its distributions at 7.1% per annum over that time. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
The Dividend's Growth Prospects Are Limited
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Unfortunately things aren't as good as they seem. Unfortunately, Andrew Peller's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year.
Our Thoughts On Andrew Peller's Dividend
In summary, while it's always good to see the dividend being raised, we don't think Andrew Peller's payments are rock solid. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. 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. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 4 warning signs for Andrew Peller you should be aware of, and 2 of them are concerning. We have also put together a list of global stocks with a solid dividend.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
