Yahoo Finance Is It Worth Considering Madison Pacific Properties Inc. (TSE:MPC) For Its Upcoming Dividend?
Madison Pacific Properties Inc. (TSE:MPC) is about to trade ex-dividend in the next 4 days. Ex-dividend means that investors that purchase the stock on or after the 8th of February will not receive this dividend, which will be paid on the 23rd of February.
Madison Pacific Properties's next dividend payment will be CA$0.052 per share, and in the last 12 months, the company paid a total of CA$0.10 per share. Calculating the last year's worth of payments shows that Madison Pacific Properties has a trailing yield of 2.5% on the current share price of CA$4.25. If you buy this business for its dividend, you should have an idea of whether Madison Pacific Properties's dividend is reliable and sustainable. So we need to check whether the dividend payments are covered, and if earnings are growing.
See our latest analysis for Madison Pacific Properties
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. Madison Pacific Properties has a low and conservative payout ratio of just 24% of its income after tax. Yet cash flows are even more important than profits for assessing a dividend, so we need to see if the company generated enough cash to pay its distribution. Fortunately, it paid out only 49% of its free cash flow in the past year.
It's positive to see that Madison Pacific Properties's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut.
Click here to see how much of its profit Madison Pacific Properties paid out over the last 12 months.
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're not enthused to see that Madison Pacific Properties's earnings per share have remained effectively flat over the past five years. It's better than seeing them drop, certainly, but over the long term, all of the best dividend stocks are able to meaningfully grow their earnings per share.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Madison Pacific Properties's dividend payments are broadly unchanged compared to where they were 10 years ago.
Final Takeaway
Is Madison Pacific Properties worth buying for its dividend? While it's not great to see that earnings per share are effectively flat over the 10-year period we checked, at least the payout ratios are low and conservative. Overall, it's not a bad combination, but we feel that there are likely more attractive dividend prospects out there.
While it's tempting to invest in Madison Pacific Properties for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 4 warning signs for Madison Pacific Properties that we strongly recommend you have a look at before investing in the company.
If you're in the market for dividend stocks, we recommend checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
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.
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