Westshore Terminals Investment's (TSE:WTE) Shareholders Will Receive A Bigger Dividend Than Last Year
Westshore Terminals Investment Corporation (TSE:WTE) has announced that it will be increasing its dividend on the 15th of April to CA$1.80. This takes the dividend yield from 3.6% to 7.5%, which shareholders will be pleased with.
See our latest analysis for Westshore Terminals Investment
Westshore Terminals Investment Doesn't Earn Enough To Cover Its Payments
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Westshore Terminals Investment was quite comfortably earning enough to cover the dividend. This means that a large portion of its earnings are being retained to grow the business.
EPS is set to fall by 4.1% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could reach 140%, which could put the dividend under pressure if earnings don't start to improve.
Westshore Terminals Investment Has A Solid Track Record
The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from CA$0.54 in 2012 to the most recent annual payment of CA$1.20. This implies that the company grew its distributions at a yearly rate of about 8.3% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
Westshore Terminals Investment May Find It Hard To Grow The Dividend
Investors could be attracted to the stock based on the quality of its payment history. Westshore Terminals Investment hasn't seen much change in its earnings per share over the last five years. Growth of 1.0% per annum is not particularly high, which might explain why the company is paying out a higher proportion of earnings. While this isn't necessarily a negative, it definitely signals that dividend growth could be constrained in the future unless earnings start to pick up again.
Westshore Terminals Investment Looks Like A Great Dividend Stock
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. Taking this all into consideration, this looks like it could be a good dividend opportunity.
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 instance, we've picked out 1 warning sign for Westshore Terminals Investment that investors should take into consideration. Is Westshore Terminals Investment not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
