Advice Mortgage Investment Corporation Atrium (TSE: AI) announced a dividend payment on July 13, with investors receiving C $ 0.075 per share. Taking into account this payment, the dividend yield will be 6.3%, which is still above the industry average.
Atrium Mortgage Investment dividend well covered by profit
While it is good to have a high dividend yield, we must also consider whether the payout is sustainable. Prior to this announcement, Atrium Mortgage Investment’s dividend was higher than its earnings, but free cash flows covered it well. We generally think that cash is more important than accounting for earnings, so given that cash flows easily cover dividends, we don’t think there is much to worry about.
EPS is expected to rise 7.1% next year. If recent dividend trends continue, the payout rate in 12 months could be 92%, slightly higher but could definitely be sustainable.
Atrium Mortgage Investment dividend volatile
Atrium Mortgage Investment has been paying dividends for some time, but its track record is not so good. This forces us to be careful about the consistency of dividends throughout the entire business cycle. Dividends rose from C $ 0.83 in 2012 to the most recent annual payment of C $ 0.92. This means that during this period the company increased its sales by about 1.2% per year. In the past, dividends have fluctuated somewhat, so even though dividends have been increased this year, we must remember that they have declined in the past.
Atrium mortgage investment could hinder dividend growth
With relatively volatile dividends, it is even more important to assess whether earnings per share are growing, which could indicate an increase in dividends in the future. However, Atrium Mortgage Investment’s earnings per share have remained largely unchanged over the past five years, which could prevent the company from paying more each year.
Atrium Mortgage Investment Dividend Doesn’t Look Sustainable
Overall, it’s nice to see a stable dividend payout, but we think the current payout rate may be volatile in the long term. The company generates a lot of money that could support dividends for a while, but its track record leaves a lot to be desired. We don’t think Atrium Mortgage Investment is a great promotion to add to your portfolio if your goal is income.
Companies with stable dividend policies are likely to enjoy more investor interest than companies suffering from a more inconsistent approach. However, investors should consider other factors when analyzing the dynamics of stocks. For example, we chose 1 warning sign for Atrium Mortgage Investment what investors should take into account. If you invest in dividends, you can also see our a curated list of high performing dividend stocks.
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