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Westshore Terminals Investment Corporation (TSE:WTE) will pay a dividend of CA$0.375 on the 15th of July. The dividend yield will be 6.7% based on this payment which is still above the industry average.
We've discovered 1 warning sign about Westshore Terminals Investment. View them for free.
Westshore Terminals Investment's Projected Earnings Seem Likely To Cover Future Distributions
A big dividend yield for a few years doesn't mean much if it can't be sustained. Prior to this announcement, Westshore Terminals Investment's dividend made up quite a large proportion of earnings but only 72% of free cash flows. In general, cash flows are more important than earnings, so we are comfortable that the dividend will be sustainable going forward, especially with so much cash left over for reinvestment.
Over the next year, EPS is forecast to fall by 6.5%. If recent patterns in the dividend continue, we could see the payout ratio reaching 92% in the next 12 months, which is on the higher end of the range we would say is sustainable.
View our latest analysis for Westshore Terminals Investment
Westshore Terminals Investment Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was CA$1.32 in 2015, and the most recent fiscal year payment was CA$1.50. This implies that the company grew its distributions at a yearly rate of about 1.3% over that duration. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.
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. Unfortunately things aren't as good as they seem. It's not great to see that Westshore Terminals Investment's earnings per share has fallen at approximately 3.2% per year over the past five years. A modest decline in earnings isn't great, and it makes it quite unlikely that the dividend will grow in the future unless that trend can be reversed.
Our Thoughts On Westshore Terminals Investment's Dividend
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. We would be a touch cautious of relying on this stock primarily for the dividend income.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. As an example, we've identified 1 warning sign for Westshore Terminals Investment that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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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.