Waterloo Brewing (TSE:WBR) has confirmed its dividend of C$0.0304
Waterloo Brewing Ltd. (TSE:WBR) will pay a dividend of C$0.0304 on November 2. This means that the annual payout will be 2.8% of the current share price, which is the industry average.
Check out our latest analysis for Waterloo Brewing
Waterloo Brewing does not earn enough to cover its payments
Unless the payouts are sustainable, the dividend yield doesn’t mean much. Based on the last payment, the company was not earning enough to cover what it was paying out to shareholders. It will be difficult to maintain this level of payment, so we would not be confident that this situation will continue.
Going forward, EPS could drop 16.0% if the company fails to turn around the situation of the past few years. If the dividend continues on recent trends, we estimate the payout ratio could reach 417%, which could put the dividend at risk if company earnings do not improve.
Waterloo Brewing is still building its balance sheet
Even though the company has been paying out a consistent dividend for some time, we’d like to see a few more years before we feel comfortable counting on it. As of 2015, the annual payment at the time was CA$0.048, compared to the last annual payment of CA$0.122. This means that it increased its distributions by 14% per year during this period. We’re not too excited about the relatively short history of dividend payouts, but the dividend is growing at a nice pace and we could take a closer look.
Dividend growth potential is fragile
Some investors will be eager to buy some of the company’s stock based on its dividend history. However, things are not so rosy. Over the past five years, it appears Waterloo Brewing’s EPS has declined by around 16% per year. These rapid declines certainly have the potential to limit dividend payouts if the trend continues in the future.
Waterloo Brewing’s dividend doesn’t look good
Overall, it’s not a great candidate for an income investment, although the dividend has remained stable this year. The company doesn’t earn enough to pay that much, and the other factors don’t look particularly promising either. Overall, the dividend is not reliable enough to make it a good income stock.
Companies with a stable dividend policy are likely to enjoy greater investor interest than those that suffer from a more inconsistent approach. Yet investors must consider a host of other factors, aside from dividend payments, when analyzing a company. For example, we encountered 3 warning signs for Waterloo Brewing you should be aware of, and 2 of them can’t be ignored. Isn’t Waterloo Brewing quite the opportunity you’ve been looking for? Why not check out our selection of the best dividend stocks.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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