Yahoo Finance Tecsys (TSE:TCS) Is Due To Pay A Dividend Of CA$0.075
The board of Tecsys Inc. (TSE:TCS) has announced that it will pay a dividend of CA$0.075 per share on the 4th of August. The dividend yield will be 1.1% based on this payment which is still above the industry average.
See our latest analysis for Tecsys
Tecsys Is Paying Out More Than It Is Earning
We like to see robust dividend yields, but that doesn't matter if the payment isn't sustainable. Based on the last payment, Tecsys' profits didn't cover the dividend, but the company was generating enough cash instead. Healthy cash flows are always a positive sign, especially when they quite easily cover the dividend.
Earnings per share is forecast to rise by 58.8% over the next year. If the dividend continues on its recent course, the payout ratio in 12 months could be 148%, which is a bit high and could start applying pressure to the balance sheet.
Tecsys Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was CA$0.07 in 2013, and the most recent fiscal year payment was CA$0.30. This means that it has been growing its distributions at 16% per annum over that time. We can see that payments have shown some very nice upward momentum without faltering, which provides some reassurance that future payments will also be reliable.
The Dividend Has Limited Growth Potential
Investors could be attracted to the stock based on the quality of its payment history. Let's not jump to conclusions as things might not be as good as they appear on the surface. Tecsys' earnings per share has shrunk at 14% 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. It's not all bad news though, as the earnings are predicted to rise over the next 12 months - we would just be a bit cautious until this becomes a long term trend.
Our Thoughts On Tecsys' Dividend
In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Tecsys' payments, as there could be some issues with sustaining them into the future. The company is generating plenty of cash, but we still think the dividend is a bit high for comfort. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Tecsys that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield 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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