Information Services (TSE:ISV) Has Announced A Dividend Of CA$0.23
Information Services Corporation's ( TSE:ISV ) investors are due to receive a payment of CA$0.23 per share on 15th of April. The dividend yield will be 3.6% based on this payment which is still above the industry average.
Check out our latest analysis for Information Services
Information Services' Dividend Is Well Covered By Earnings
If the payments aren't sustainable, a high yield for a few years won't matter that much. Before making this announcement, Information Services was earning enough to cover the dividend, but it wasn't generating any free cash flows. Despite the negative free cash flow, it's important to highlight that the company recently signed a 20-year contract with a major customer, securing a revenue-stream for the next 20 years. This indicates that the situation may not be as dire as it appears at first glance, with the long-term prospects bolstered by this agreement.
The next year is set to see EPS grow by 42.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 47%, which is in the range that makes us comfortable with the sustainability of the dividend.
Information Services Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The annual payment during the last 10 years was CA$0.80 in 2014, and the most recent fiscal year payment was CA$0.92. This means that it has been growing its distributions at 1.4% per annum over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
The Dividend Has Growth Potential
The company's investors will be pleased to have been receiving dividend income for some time. Information Services has impressed us by growing EPS at 5.8% per year over the past five years. The lack of cash flows does make us a bit cautious though, especially when it comes to the future of the dividend.
Our Thoughts On Information Services' Dividend
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Case in point: We've spotted 3 warning signs for Information Services (of which 1 is a bit unpleasant!) you should know about. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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.
