Yahoo Finance High Arctic Energy Services (TSE:HWO) Has Affirmed Its Dividend Of CA$0.005
The board of High Arctic Energy Services Inc (TSE:HWO) has announced that it will pay a dividend on the 14th of September, with investors receiving CA$0.005 per share. The dividend yield will be 4.7% based on this payment which is still above the industry average.
Check out our latest analysis for High Arctic Energy Services
High Arctic Energy Services Might Find It Hard To Continue The Dividend
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. The company is paying out a large amount of its cash flows, even though it isn't generating any profit. This is quite a strong warning sign that the dividend may not be sustainable.
Recent, EPS has fallen by 48.0%, so this could continue over the next year. This means the company will be unprofitable and managers could face the tough choice between continuing to pay the dividend or taking pressure off the balance sheet.
Dividend Volatility
The company has a long dividend track record, but it doesn't look great with cuts in the past. Since 2013, the annual payment back then was CA$0.12, compared to the most recent full-year payment of CA$0.06. The dividend has shrunk at around 6.7% a year during that period. A company that decreases its dividend over time generally isn't what we are looking for.
Dividend Growth Potential Is Shaky
With a relatively unstable dividend, and a poor history of shrinking dividends, it's even more important to see if EPS is growing. High Arctic Energy Services' earnings per share has shrunk at 48% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future.
High Arctic Energy Services' Dividend Doesn't Look Great
Overall, while some might be pleased that the dividend wasn't cut, we think this may help High Arctic Energy Services make more consistent payments in the future. The company seems to be stretching itself a bit to make such big payments, but it doesn't appear they can be consistent over time. The dividend doesn't inspire confidence that it will provide solid income in the future.
Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. Just as an example, we've come across 3 warning signs for High Arctic Energy Services you should be aware of, and 2 of them make us uncomfortable. 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.
