The board of BioSyent Inc. (CVE:RX) has announced that it will pay a dividend on the 13th of June, with investors receiving CA$0.05 per share. This payment means the dividend yield will be 1.7%, which is below the average for the industry.

We've discovered 1 warning sign about BioSyent. View them for free.

BioSyent's Future Dividend Projections Appear Well Covered By Earnings

Even a low dividend yield can be attractive if it is sustained for years on end. Before making this announcement, BioSyent was easily earning enough to cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.

Over the next year, EPS is forecast to expand by 10.4%. If the dividend continues along recent trends, we estimate the payout ratio will be 25%, which is in the range that makes us comfortable with the sustainability of the dividend.

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BioSyent Is Still Building Its Track Record

Looking back, the dividend has been stable, but the company hasn't been paying a dividend for very long so we can't be confident that the dividend will remain stable through all economic environments. The annual payment during the last 2 years was CA$0.16 in 2023, and the most recent fiscal year payment was CA$0.20. This means that it has been growing its distributions at 12% 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.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that BioSyent has grown earnings per share at 14% per year over the past five years. BioSyent definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

BioSyent Looks Like A Great Dividend Stock

Overall, we like to see the dividend staying consistent, and we think BioSyent might even raise payments in the future. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. All of these factors considered, we think this has solid potential as a dividend stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. 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 1 warning sign for BioSyent that investors should know about before committing capital to this stock. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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