Yahoo Finance High Liner Foods Incorporated (TSE:HLF) Is About To Go Ex-Dividend, And It Pays A 2.9% Yield
High Liner Foods Incorporated (TSE:HLF) stock is about to trade ex-dividend in 4 days time. You will need to purchase shares before the 29th of May to receive the dividend, which will be paid on the 15th of June.
High Liner Foods's next dividend payment will be CA$0.05 per share, on the back of last year when the company paid a total of CA$0.14 to shareholders. Last year's total dividend payments show that High Liner Foods has a trailing yield of 2.9% on the current share price of CA$6.69. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. As a result, readers should always check whether High Liner Foods has been able to grow its dividends, or if the dividend might be cut.
Check out our latest analysis for High Liner Foods
Dividends are usually paid out of company profits, so if a company pays out more than it earned then its dividend is usually at greater risk of being cut. High Liner Foods is paying out an acceptable 53% of its profit, a common payout level among most companies. That said, even highly profitable companies sometimes might not generate enough cash to pay the dividend, which is why we should always check if the dividend is covered by cash flow. It distributed 25% of its free cash flow as dividends, a comfortable payout level for most companies.
It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
When earnings decline, dividend companies become much harder to analyse and own safely. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. With that in mind, we're discomforted by High Liner Foods's 22% per annum decline in earnings in the past five years. Ultimately, when earnings per share decline, the size of the pie from which dividends can be paid, shrinks.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. In the last ten years, High Liner Foods has lifted its dividend by approximately 0.9% a year on average.
Final Takeaway
Is High Liner Foods worth buying for its dividend? We're not enthused by the declining earnings per share, although at least the company's payout ratio is within a reasonable range, meaning it may not be at imminent risk of a dividend cut. In summary, while it has some positive characteristics, we're not inclined to race out and buy High Liner Foods today.
So if you want to do more digging on High Liner Foods, you'll find it worthwhile knowing the risks that this stock faces. For instance, we've identified 4 warning signs for High Liner Foods (1 is significant) you should be aware of.
A common investment mistake is buying the first interesting stock you see. Here you can find a list of promising dividend stocks with a greater than 2% yield and an upcoming dividend.
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This article by Simply Wall St is general in nature. 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. Thank you for reading.
