MCAN Mortgage (TSE:MKP) Will Pay A Dividend Of CA$0.36
MCAN Mortgage Corporation (TSE:MKP) has announced that it will pay a dividend of CA$0.36 per share on the 31st of March. The dividend yield will be 9.0% based on this payment which is still above the industry average.
View our latest analysis for MCAN Mortgage
MCAN Mortgage's Dividend Forecasted To Be Well Covered By Earnings
While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable.
Having distributed dividends for at least 10 years, MCAN Mortgage has a long history of paying out a part of its earnings to shareholders. Based on MCAN Mortgage's last earnings report, the payout ratio is at a decent 81%, meaning that the company is able to pay out its dividend with a bit of room to spare.
Over the next year, EPS is forecast to expand by 12.5%. If recent patterns in the dividend continues, the future payout ratio in 12 months could be 82% which is a bit high but can definitely be sustainable.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. The annual payment during the last 10 years was CA$1.41 in 2013, and the most recent fiscal year payment was CA$1.44. Dividend payments have grown at less than 1% a year over this period. It's encouraging to see some dividend growth, but the dividend has been cut at least once, and the size of the cut would eliminate most of the growth anyway, which makes this less attractive as an income investment.
The Dividend's Growth Prospects Are Limited
With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Although it's important to note that MCAN Mortgage's earnings per share has basically not grown from where it was five years ago, which could erode the purchasing power of the dividend over time.
An additional note is that the company has been raising capital by issuing stock equal to 16% of shares outstanding in the last 12 months. Regularly doing this can be detrimental - it's hard to grow dividends per share when new shares are regularly being created.
MCAN Mortgage's Dividend Doesn't Look Sustainable
Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. The track record isn't great, and the payments are a bit high to be considered sustainable. Overall, we don't think this company has the makings of a good income stock.
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. For example, we've picked out 3 warning signs for MCAN Mortgage that investors should know about before committing capital to this stock. Is MCAN Mortgage not quite the opportunity you were looking for? Why not check out our selection of top 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.
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