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Altius Minerals Corporation's (TSE:ALS) investors are due to receive a payment of CA$0.08 per share on 30th of June. Including this payment, the dividend yield on the stock will be 1.5%, which is a modest boost for shareholders' returns.
View our latest analysis for Altius Minerals
Altius Minerals' Dividend Is Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. The last dividend was quite easily covered by Altius Minerals' earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
EPS is set to fall by 15.7% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 69%, which is comfortable for the company to continue in the future.
Altius Minerals Is Still Building Its Track Record
It is great to see that Altius Minerals has been paying a stable dividend for a number of years now, however we want to be a bit cautious about whether this will remain true through a full economic cycle. The annual payment during the last 8 years was CA$0.08 in 2015, and the most recent fiscal year payment was CA$0.32. This means that it has been growing its distributions at 19% per annum over that time. The dividend has been growing rapidly, however with such a short payment history we can't know for sure if payment can continue to grow over the long term, so caution may be warranted.
Dividend Growth May Be Hard To Achieve
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. However, Altius Minerals' EPS was effectively flat over the past five years, which could stop the company from paying more every year. Growth of 0.2% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't bad in itself, but unless earnings growth pick up we wouldn't expect dividends to grow either.
Our Thoughts On Altius Minerals' Dividend
In summary, we are pleased with the dividend remaining consistent, and we think there is a good chance of this continuing in the future. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. Taking all of this into consideration, the dividend looks viable moving forward, but investors should be mindful that the company has pushed the boundaries of sustainability in the past and may do so again.