Yahoo Finance Lorne Park Capital Partners' (CVE:LPC) Shareholders Will Receive A Bigger Dividend Than Last Year
Lorne Park Capital Partners Inc.'s (CVE:LPC) periodic dividend will be increasing on the 31st of July to CA$0.008, with investors receiving 14% more than last year's CA$0.007. This takes the dividend yield to 2.4%, which shareholders will be pleased with.
Check out our latest analysis for Lorne Park Capital Partners
Lorne Park Capital Partners' Earnings Easily Cover The Distributions
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Before this announcement, Lorne Park Capital Partners was paying out 76% of earnings, but a comparatively small 35% of free cash flows. Since the dividend is just paying out cash to shareholders, we care more about the cash payout ratio from which we can see plenty is being left over for reinvestment in the business.
Over the next year, EPS could expand by 44.5% if recent trends continue. If the dividend continues along recent trends, we estimate the payout ratio will be 62%, which would make us comfortable with the sustainability of the dividend, despite the levels currently being quite high.
Lorne Park Capital Partners Is Still Building Its Track Record
The company has maintained a consistent dividend for a few years now, but we would like to see a longer track record before relying on it. The dividend has gone from an annual total of CA$0.02 in 2021 to the most recent total annual payment of CA$0.028. This works out to be a compound annual growth rate (CAGR) of approximately 12% a year over that time. It is always nice to see strong dividend growth, but with such a short payment history we wouldn't be inclined to rely on it until a longer track record can be developed.
Lorne Park Capital Partners Might Find It Hard To Grow Its Dividend
Some investors will be chomping at the bit to buy some of the company's stock based on its dividend history. We are encouraged to see that Lorne Park Capital Partners has grown earnings per share at 45% per year over the past five years. EPS is growing rapidly, although the company is also paying out a large portion of its profits as dividends. If earnings keep growing, the dividend may be sustainable, but generally we'd prefer to see a fast growing company reinvest in further growth.
Our Thoughts On Lorne Park Capital Partners' Dividend
In summary, while it's always good to see the dividend being raised, we don't think Lorne Park Capital Partners' payments are rock solid. In the past, the payments have been unstable, but over the short term the dividend could be reliable, with the company generating enough cash to cover it. We would probably look elsewhere for an income investment.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. 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 3 warning signs for Lorne Park Capital Partners you should be aware of, and 1 of them is concerning. Is Lorne Park Capital Partners not quite the opportunity you were looking for? Why not check out our selection of top 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.
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