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It looks like Elysee Development Corp. (CVE:ELC) is about to go ex-dividend in the next 3 days. You can purchase shares before the 23rd of February in order to receive the dividend, which the company will pay on the 3rd of March.
Elysee Development's upcoming dividend is CA$0.03 a share, following on from the last 12 months, when the company distributed a total of CA$0.03 per share to shareholders. Based on the last year's worth of payments, Elysee Development stock has a trailing yield of around 6.6% on the current share price of CA$0.61. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether Elysee Development can afford its dividend, and if the dividend could grow.
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Elysee Development paid out a comfortable 44% of its profit last year.
When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.
Have Earnings And Dividends Been Growing?
Companies with falling earnings are riskier for dividend shareholders. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. From this viewpoint, it's unfortunate that earnings per share have declined 5.6% over the last year.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. Since the start of our data, five years ago, Elysee Development has lifted its dividend by approximately 15% a year on average.
Is Elysee Development an attractive dividend stock, or better left on the shelf? Elysee Development's earnings per share have declined over the past 12 months, although we note that it is paying out a low fraction of its earnings. Ordinarily we wouldn't be too concerned about a one-year decline, especially given the payout ratio is low. This makes us wonder if the company is incurring costs by reinvesting in its business. From a dividend perspective we struggle to see value in a company with declining earnings per share, but it's also true that a one-year decline often doesn't mean much. So we wouldn't be too quick to write this one off. It might be worth researching if the company is reinvesting in growth projects that could grow earnings and dividends in the future, but for now we're on the fence about its dividend prospects.
If you want to look further into Elysee Development, it's worth knowing the risks this business faces. To help with this, we've discovered 7 warning signs for Elysee Development (1 can't be ignored!) that you ought to be aware of before buying the shares.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
This article by Simply Wall St is general in nature. 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.
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