Andrew Peller's (TSE:ADW.A) Dividend Will Be Increased To CA$0.061

The board of Andrew Peller Limited (TSE:ADW.A) has announced that it will be increasing its dividend on the 7th of January to CA$0.061. This will take the dividend yield from 2.7% to 3.0%, providing a nice boost to shareholder returns.

See our latest analysis for Andrew Peller

Andrew Peller's Earnings Easily Cover the Distributions

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Before making this announcement, Andrew Peller was earning enough to cover the dividend, but it wasn't generating any free cash flows. Since a dividend means the company is paying out cash to investors, this could prove to be a problem in the future.

Looking forward, earnings per share is forecast to rise by 31.7% over the next year. If the dividend continues on this path, the payout ratio could be 42% by next year, which we think can be pretty sustainable going forward.

historic-dividend

Andrew Peller Has A Solid Track Record

Even over a long history of paying dividends, the company's distributions have been remarkably stable. Since 2011, the dividend has gone from CA$0.11 to CA$0.22. This means that it has been growing its distributions at 7.1% per annum over that time. Companies like this can be very valuable over the long term, if the decent rate of growth can be maintained.

Andrew Peller May Find It Hard To Grow The Dividend

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Andrew Peller hasn't seen much change in its earnings per share over the last five years.

In Summary

Overall, we always like to see the dividend being raised, but we don't think Andrew Peller will make a great income stock. While Andrew Peller is earning enough to cover the payments, the cash flows are lacking. This company is not in the top tier of income providing stocks.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Just as an example, we've come across 4 warning signs for Andrew Peller you should be aware of, and 2 of them shouldn't be ignored. We have also put together a list of global stocks with a solid dividend.

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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.