Yahoo Finance We Wouldn't Be Too Quick To Buy Mediagrif Interactive Technologies Inc. (TSE:MDF) Before It Goes Ex-Dividend
It looks like Mediagrif Interactive Technologies Inc. (TSE:MDF) is about to go ex-dividend in the next 3 days. If you purchase the stock on or after the 30th of September, you won't be eligible to receive this dividend, when it is paid on the 15th of October.
Mediagrif Interactive Technologies's next dividend payment will be CA$0.1 per share, on the back of last year when the company paid a total of CA$0.4 to shareholders. Last year's total dividend payments show that Mediagrif Interactive Technologies has a trailing yield of 5.6% on the current share price of CA$7.08. If you buy this business for its dividend, you should have an idea of whether Mediagrif Interactive Technologies's dividend is reliable and sustainable. As a result, readers should always check whether Mediagrif Interactive Technologies has been able to grow its dividends, or if the dividend might be cut.
See our latest analysis for Mediagrif Interactive Technologies
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. Mediagrif Interactive Technologies's dividend is not well covered by earnings, as the company lost money last year. This is not a sustainable state of affairs, so it would be worth investigating if earnings are expected to recover. Considering the lack of profitability, we also need to check if the company generated enough cash flow to cover the dividend payment. If cash earnings don't cover the dividend, the company would have to pay dividends out of cash in the bank, or by borrowing money, neither of which is long-term sustainable. It paid out 91% of its free cash flow in the form of dividends last year, which is outside the comfort zone for most businesses. Companies usually need cash more than they need earnings - expenses don't pay themselves - so it's not great to see it paying out so much of its cash flow.
Click here to see the company's payout ratio, plus analyst estimates of its future dividends.
Have Earnings And Dividends Been Growing?
Businesses with shrinking earnings are tricky from a dividend perspective. If business enters a downturn and the dividend is cut, the company could see its value fall precipitously. Mediagrif Interactive Technologies was unprofitable last year and, unfortunately, the general trend suggests its earnings have been in decline over the last five years, making us wonder if the dividend is sustainable at all.
Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. Mediagrif Interactive Technologies has delivered 7.2% dividend growth per year on average over the past ten years.
Get our latest analysis on Mediagrif Interactive Technologies's balance sheet health here.
To Sum It Up
Is Mediagrif Interactive Technologies an attractive dividend stock, or better left on the shelf? We're a bit uncomfortable with it paying a dividend while being loss-making, especially given that the dividend was not well covered by free cash flow. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.
Wondering what the future holds for Mediagrif Interactive Technologies? See what the five 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.
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.
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. Thank you for reading.
