Yahoo Finance Chartwell Retirement Residences (TSE:CSH.UN) Is Due To Pay A Dividend Of CA$0.051
The board of Chartwell Retirement Residences (TSE:CSH.UN) has announced that it will pay a dividend on the 15th of May, with investors receiving CA$0.051 per share. Based on this payment, the dividend yield will be 4.9%, which is fairly typical for the industry.
See our latest analysis for Chartwell Retirement Residences
Chartwell Retirement Residences Is Paying Out More Than It Is Earning
Solid dividend yields are great, but they only really help us if the payment is sustainable. Chartwell Retirement Residences is not generating a profit, and despite this is paying out most of its free cash flow as a dividend. Generally paying a dividend without making profits isn't a great idea and we are also worried that there is limited reinvestment into the business.
Earnings per share is forecast to rise by 145.3% over the next year. If the dividend continues on its recent course, the company could be paying out several times what it earns in the next 12 months, which could start applying pressure to the balance sheet.
Chartwell Retirement Residences Has A Solid Track Record
The company has an extended history of paying stable dividends. Since 2014, the dividend has gone from CA$0.54 total annually to CA$0.612. This works out to be a compound annual growth rate (CAGR) of approximately 1.3% a year over that time. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.
Dividend Growth Potential Is Shaky
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Earnings per share has been sinking by 27% over the last five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.
Chartwell Retirement Residences' Dividend Doesn't Look Sustainable
Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. This company is not in the top tier of income providing stocks.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Chartwell Retirement Residences that investors should take into consideration. 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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