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EQB Inc. (TSE:EQB) will increase its dividend from last year's comparable payment on the 31st of December to CA$0.49. This takes the annual payment to 1.9% of the current stock price, which unfortunately is below what the industry is paying.
View our latest analysis for EQB
EQB's Earnings Will Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive.
EQB has a long history of paying out dividends, with its current track record at a minimum of 10 years. Using data from its latest earnings report, EQB's payout ratio sits at 17%, an extremely comfortable number that shows that it can pay its dividend.
Over the next 3 years, EPS is forecast to expand by 48.4%. Analysts estimate the future payout ratio will be 17% over the same time period, which is in the range that makes us comfortable with the sustainability of the dividend.
EQB Has A Solid Track Record
The company has been paying a dividend for a long time, and it has been quite stable which gives us confidence in the future dividend potential. Since 2014, the annual payment back then was CA$0.32, compared to the most recent full-year payment of CA$1.96. This works out to be a compound annual growth rate (CAGR) of approximately 20% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Looks Likely To Grow
Investors could be attracted to the stock based on the quality of its payment history. EQB has seen EPS rising for the last five years, at 13% per annum. EQB definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
We Really Like EQB's Dividend
In summary, it is always positive to see the dividend being increased, and we are particularly pleased with its overall sustainability. 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. 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. Taking the debate a bit further, we've identified 1 warning sign for EQB that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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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.