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The board of Lorne Park Capital Partners Inc. (CVE:LPC) has announced that the dividend on 29th of July will be increased to CA$0.006, which will be 20% higher than last year's payment of CA$0.005 which covered the same period. This takes the annual payment to 2.0% of the current stock price, which is about average for the industry.
Check out our latest analysis for Lorne Park Capital Partners
Lorne Park Capital Partners' Earnings Easily Cover the Distributions
While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Prior to this announcement, Lorne Park Capital Partners' dividend was comfortably covered by both cash flow and earnings. This indicates that quite a large proportion of earnings is being invested back into the business.
Looking forward, earnings per share could rise by 63.3% over the next year if the trend from the last few years continues. Assuming the dividend continues along recent trends, we think the payout ratio could be 36% by next year, which is in a pretty sustainable range.
Lorne Park Capital Partners Is Still Building Its Track Record
The company hasn't been paying a dividend for very long at all, so we can't really make a judgement on how stable the dividend has been. This doesn't mean that the company can't pay a good dividend, but just that we want to wait until it can prove itself.
The Dividend Looks Likely To Grow
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. Lorne Park Capital Partners has impressed us by growing EPS at 63% per year over the past five years. The company doesn't have any problems growing, despite returning a lot of capital to shareholders, which is a very nice combination for a dividend stock to have.
Lorne Park Capital Partners Looks Like A Great Dividend Stock
Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. To that end, Lorne Park Capital Partners has 3 warning signs (and 1 which is potentially serious) we think you should know about. Is Lorne Park Capital Partners not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.