Yahoo Finance We Wouldn't Be Too Quick To Buy Atrium Mortgage Investment Corporation (TSE:AI) Before It Goes Ex-Dividend
Regular readers will know that we love our dividends at Simply Wall St, which is why it's exciting to see Atrium Mortgage Investment Corporation (TSE:AI) is about to trade ex-dividend in the next 4 days. Investors can purchase shares before the 27th of February in order to be eligible for this dividend, which will be paid on the 12th of March.
Atrium Mortgage Investment's next dividend payment will be CA$0.075 per share, and in the last 12 months, the company paid a total of CA$0.96 per share. Based on the last year's worth of payments, Atrium Mortgage Investment stock has a trailing yield of around 6.5% on the current share price of CA$14.79. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! So we need to investigate whether Atrium Mortgage Investment can afford its dividend, and if the dividend could grow.
See our latest analysis for Atrium Mortgage Investment
Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. Last year Atrium Mortgage Investment paid out 92% of its profits as dividends to shareholders, suggesting the dividend is not well covered by earnings.
When a company pays out a dividend that is not well covered by profits, the dividend is generally seen as more vulnerable to being cut.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
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. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we're not enthused to see that Atrium Mortgage Investment's earnings per share have remained effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.
We'd also point out that Atrium Mortgage Investment issued a meaningful number of new shares in the past year. It's hard to grow dividends per share when a company keeps creating new shares.
Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Since the start of our data, seven years ago, Atrium Mortgage Investment has lifted its dividend by approximately 2.1% a year on average.
To Sum It Up
Is Atrium Mortgage Investment worth buying for its dividend? While we're glad to see that its earnings aren't shrinking, we're not enamored of the fact that it's paying out 92% of last year's earnings. This is not an overtly appealing combination of characteristics, and we're just not that interested in this company's dividend.
Ever wonder what the future holds for Atrium Mortgage Investment? See what the three analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow
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.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
